Question

Mr Albert calls you into his office and introduces Mr Pascoe of Pascoe’s Paints.  He gives you a sheet of paper on which Mr Pascoe has written his cash receipts and payments for the quarter ended 30 June, 2020, and instructs you to prepare a Cash Flow statement for Mr Pascoe. You are told that the Bank Balance on 1 April 2020 was $3720.

Cash Receipts			Cash Payments
Details	$	Details		$
Receipts from Accounts Receivable	130350	Payments to Accounts Payable		94400
Cash Sales	150 000	Cash Purchases of Stock		45 000
Capital	10 000	Wages		57 000
Loan—CBC	20 000	Drawings		50 000
		Prepaid Rent		36 000
		Customs Duty		14 100
		Vehicle Expenses		8 800
		Office Expenses		23 400
		Equipment		35 000

Required:

Prepare the cash flow statement of Pascoe’s Paints as requested by Mr Albert.

Mr Albert tells you that on the 1 July 2019 two clients Jim and Nelly decided to join forces and form a partnership (J&N Partners). Their contributions to the partnership were:

Jim – Cash: $110000, Accounts Payable: $10000, Equipment: $50,000

Nelly – Cash: $200000, Inventory: $80000, Accounts receivable: $15000

Their agreement has the following conditions:

• The partners receive 3% interest on their capital balances
• Salaries Jim - $30000 and Nelly - $40000
• The remaining profit is split equally.
• Any drawings attract a 10% interest rate for the financial year.

Mr Albert tells you that in the year to 30 June, 2020 the partnership made a profit of $175,000.00

Required:

Mr Albert asks you to prepare a Profit Distribution Schedule for the year ended 30 June 2020.

Answer 1

PASCOE'S PAINTS
CASH FLOW STATEMENT
For the quarter ended 30 June 2020
Cash Resulting from Operating Activities
Cash receipts from accounts Recievable	130,350
Cash Sales	150,000
Cash paid to accounts payable	-94,400
Cash purchases of stock	-45,000
Wages paid	-57,000
Rent paid in advance	-36,000
Customs Duty paid	-14,100
Vehicle expenses paid	-8,800
Office Expenses paid	-23,400
Net Cash Resulting from Operating Activities	1,650
Cash Resulting from Investing Activities
Equipment	-35,000
Net Cash Resulting from Investing Activities	-35,000
Cash Resulting from Financing Activities
Capital	10,000
Loan - CBC	20,000
Drawings	-50,000
Net Cash Resulting from Financing Activities	-20,000
Net Increase/ Decrease in cash and cash equivalents	-53,350
Cash and cash equivalents on 1 April, 2020	3,720
Cash and cash equivalents on 30 June, 2020	-49,630

J&N Partners
Profit Distribution Schedule
For the year ended 30 June 2020
Net Profit of the year	175,000
Add: interest on Drawings @10%	5,000
Less: Interest on capitals @3%
Jim	3,300
Nelly	6,000
capital brought	300	9,600
Less: Salaries
Jim	30,000
Nelly	40,000	70,000
Profit available for distribution (equal share)	90,400
Jim	30,133.33
Nelly	30,133.33
Mr. Albert	30,133.33