In: Accounting
QUESTION 4
Lesedi Company (Pty) Ltd.’s balance sheets for the last two years are provided below
Balance Sheet |
2019 |
2018 |
Cash |
R 82 000 |
R 40 000 |
Accounts Receivable |
180 000 |
150 000 |
Inventory |
170 000 |
200 000 |
Equipment |
200 000 |
140 000 |
Accum. Depreciation |
(72 000) |
(60 000) |
Total Assets |
R560 000 |
R470 000 |
Accounts Payable |
R100 000 |
R 80 000 |
Long-term Payables |
100 000 |
50 000 |
Ordinary Shares |
250 000 |
250 000 |
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The company’s income statement for 2019 is provided below:
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*The company sold equipment for R57 000 that had a cost of R60 000
Required:
Prepare the company’s Statement of Cash flow for 2019. Use the direct method for calculating the cash flows from operating activities. (15)
LESEDI COMPANY(Pty) Ltd |
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CASH FLOW STATEMENT FOR THE YEAR 2019 |
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Particulars |
Amount |
Amount |
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I. Cash flow from operating activities |
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Collection from Sales |
315,000 |
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Payment for Purchases |
(70,000) |
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Operating Expense |
(58,000) |
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Income Tax Expenses |
(30,000) |
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Cash generated from operating activities |
157,000 |
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II. Cash flow from investing activities |
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Sale of Equipment |
57,000 |
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Purchase of Equipment |
(120,000) |
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Cash used in Investing activities |
(63,000) |
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III. Cash flow from financing actvities |
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Borrowig of long-term payables |
50,000 |
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Interest on borrowings |
(2,000) |
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Dividend paid to shareholders |
(100,000) |
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Cash used in financing activities |
(52,000) |
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Net Cash Inflow |
42,000 |
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Add: Opening Cash and cash equivalents |
40,000 |
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Closing cash and cash equivalents |
82,000 |
Working Notes
1. Collection from Sales = Sales revenue- Increase in Account Receivable
= 345000-30000 = 315000
2. Payment for Purchases = Purchases- Increase in Accounts Payable
= (120000-200000+170000)- 20000 = 70000
3. Equipment purchase value= Closing cost-(Opening cost-cost of asset sold)
= 200000-(140000-60000) =120000