Question

The financial statements for Waverley Ltd are provided below:

Waverley Ltd

Comparative Balance Sheet

As at 30 June 2019 and 2020

	2019	2020
Assets
Cash At Bank	167,000	215,000
Accounts Receivable	213,000	158,000
Inventory	68,000	73,000
Prepaid Rent	4,000	5,000
Buildings	320,000	350,000
Accumulated Depreciation – Buildings	(108,000)	(132,000)
Equipment	67,000	78,000
Accumulated Depreciation – Equipment	(25,000)	(26,000)
	706,000	721,000
Liabilities
Accounts Payable	236,000	228,000
Dividend Payable	12,000	13,000
Salary Payable	18,000	20,000
Tax Payable	16,000	17,000
Bank Loan	158,000	171,000
	440,000	449,000
Equity
Capital	170,000	164,000
Retained Earnings	96,000	108,000
	266,000	272,000

Waverley Ltd

Income Statement

For the Year Ended at 30 June 2020

Sales		1,000,000
COGS		(450,000)
Gross Profit		550,000
Profit on sale of Equipment		2,000
Rent	42,000
Salary	400,000
Interest	12,000
Depreciation Expense – Buildings	13,000
Depreciation Expense – Equipment	15,000
		(482,000)
Net Profit before Tax		70,000
Less Taxation expense		(21,000)
Net Profit		49,000

Required:

Prepare an extract of the Cash Flow Statement (Direct Method) for the year ended 30 June 2020 showing Cash Flows from Operating Activities AND Cash Flows from Financing Activities. Show all workings.

If possible, in workings for the cash flow, please use ledgers to show your calculations. For example, ‘Accounts Receivable’ Ledger to get the value of ‘Cash flow from Customers’

Ledger Templet

*Please upload the solution as soon as you can finish it. Thanks for your help

Answer 1

Solution:
	Statement of Cash Flows - Direct Method
	© www.excel-skills.com	Amount in $	Amount in $
	Cash flows from operating activities
	Cash Receipts:
	Cash receipts from customers (Wn1)	$   10,55,000
	Cash Payments:
	Cash paid for Cost of Supplies (WN2)	$   -4,63,000
	Rent Paid	$      -43,000
	Salary Paid	$   -3,98,000
	Interest Paid	$      -12,000
	Tax Paid	$      -20,000
	Net cash from operating activities		$     1,19,000
	Cash flows from investing activities
	Purchase of Equipment	$      -11,000
	Purchase of Building	$      -30,000
	Net cash used in investing activities		$      -41,000
	Cash flows from financing activities
	Bank Loan Taken	$        13,000
	Repurchase of Capital	$        -6,000
	Cash Dividend Paid	$      -37,000
	Net cash used in financing activities		$      -30,000
	Net increase in cash and cash equivalents		$        48,000
	Cash and cash equivalents at beginning of period		$     1,67,000
	Cash and cash equivalents at end of period		$     2,15,000
	Working notes: 1
	Calculation of cash collection from customer
	Sales	$       10,00,000
	Add: Opening AR	$         2,13,000
	Less: Closing AR	$         1,58,000
	Cash Collected	$       10,55,000
	Working notes: 2
	Calculation of purhcase of inventory
	Cost of Sales	$         4,50,000
	Add: Closing inventory	$             73,000
	Less : Opening Inventory	$             68,000
	Material Purhcased	$         4,55,000
	Calculation of amount paid to supplied
	Op. Balance of Acct Payable	$         2,36,000
	Add: Purchases	$         4,55,000
	Less: Cl. Balance of Account payable	$         2,28,000
	Cash paid	$         4,63,000
	Working notes: 3
	Calculation of Dividend Paid in Cash
	Beginning balance of retaiend Earnings	$             96,000
	Add: Net Income of the year	$             49,000
	Less: Ending balance of retained earnings	$         1,08,000
	Dividend Paid	$             37,000