In: Accounting
Vittoria Ltd requires a Statement of Cash Flows to be prepared for the year ended
31 March 2018, the following information has been collected for this purpose.
Vittoria Ltd Balance Sheets as at 31 March |
||
2017 |
2018 |
|
Cash |
$176 000 |
$239 000 |
Accounts receivable |
220 000 |
280 000 |
Allowance for doubtful debts |
(30 000) |
(40 000) |
Inventory |
90 000 |
100 000 |
Plant and equipment |
900 000 |
1 074 000 |
Accumulated depreciation |
(80 000) |
(100 000) |
Total assets |
$1 276 000 |
$1 553 000 |
Accounts payable |
80 000 |
70 000 |
Interest payable |
1 000 |
2 000 |
Income tax payable |
76 000 |
88 000 |
Long term loans |
109 000 |
148 000 |
Share capital |
400 000 |
500 000 |
Asset revaluation surplus |
- |
30 000 |
Retained earnings |
610 000 |
715 000 |
Total equity and liabilities |
$1 276 000 |
$1 553 000 |
Vittoria Ltd SCI for the year ended 31 March 2018: |
|
Sales |
$885 000 |
Less expenses: |
|
COGS |
240 000 |
Depreciation expense |
90 000 |
Interest expense |
6 000 |
Doubtful debts expense |
40 000 |
Salaries and wages expense |
200 000 |
Income tax expense |
84 000 |
Other expenses |
120 000 |
Profit after tax |
105 000 |
OCI: Revaluation gain |
30 000 |
TCI |
$135 000 |
Question 2 continued:
Additional information:
Vittoria Ltd classifies interest expense and dividends paid as cash outflows from financing activities.
Plant and equipment, with a fair value of $100 000, has been acquired by the issue of
$100 000 worth of fully paid Vittoria Ltd shares to the sellers of the plant and equipment.
During the year, equipment that originally cost $100 000 was sold for $30 000 cash.
Plant and equipment was revalued upwards by $30 000.
A long-term loan of $30 000 was specifically organised for the purchase of plant and equipment costing $30 000.
Required:
(i) Prepare the general ledger accounts as required in the answer booklet.
(ii) Prepare a statement of cash flows for Vittoria Ltd, for the year ended 31 March 2018, in accordance with NZ IAS 7 Statement of Cash Flows. Vittoria Ltd uses the indirectmethod for the cash flows from operating activities (CFOA) section.
(iii) Prepare a statement of cash flows for Vittoria Ltd, for the year ended 31 March 2018, in accordance with NZ IAS 7 Statement of Cash Flows. Vittoria Ltd uses the directmethod for the cash flows from operating activities (CFOA) section. Complete the necessary reconciliation, as required by NZ FRS-44, to be included in the notes.
(iv) Explain, by completing the table in the answer booklet, how your answers to (ii) and (iii) above would changeifVittoria Ltd classified interest expense paid as a cash outflow from operating activities.
(v) Vittoria Ltd has provided you with 15 types of cash inflows and cash outflows in the answer booklet and requires you to determine where they should be included in the Statement of Cash Flows in accordance with NZ IAS 7 Statement of Cash Flows. AssumeVittoria Ltd uses the direct method for CFOA. Hint: Remember certain cash flows have a choice of classification; for these particular cash flows highlight the two choices available.
CFOA = cash flows from operating activities, CFIA = cash flows from investing activities and CFFA = cash flows from financing activities.
FY 2017-18 | |
Particulars | Indirect Method |
TCI | 1,35,000.00 |
Add; Revaluation gain | 30,000.00 |
Profit After Tax | 1,05,000.00 |
Add; | |
Depreciation | 90,000.00 |
Doutbful Debt expense | 40,000.00 |
Income Tax Expense | 84,000.00 |
Increase in Accounts Receivable | -60,000.00 |
Increase in Inventory | -10,000.00 |
Increase in Interest payable | -1,000.00 |
Reduction in Accounts payable | -10,000.00 |
Cash from Operating Activities | 2,38,000.00 |
Long Term Loans: | |
For Plant & Equipment | 30000 |
For other purpose | 9000 |
Cash from Financing activities | 39000 |
Purchase of Equipment | -244000 |
Sale of Equipment | 30000 |
Cashflow from Investing Activities | -214000 |
Net Cash Increase during the year | 63,000.00 |
FY 2017-18 | |
Indirect Method | |
Cash from Customers | 8,05,000 |
Cash paid to supplier | -2,50,000 |
Employee salary | -2,00,000 |
Other expense | -1,17,000 |
Cash from Operations | 2,38,000 |
Long Term Loans: | |
For Plant & Equipment | 30,000 |
For other purpose | 9,000 |
Cash from Financing activities | 39,000 |
Purchase of Equipment | -2,44,000 |
Sale of Equipment | 30,000 |
Cashflow from Investing Activities | -2,14,000 |
Net Cash Increase during the year | 63,000 |
Cash 31.3.2017 | 1,76,000 |
Cash 31.3.2018 | 2,39,000 |
Net Cash Increase | 63,000 |