Question

The Following are extracts from the financial statements of Wewe Ltd. As at 31^st March:

	2018		2017
	Shs ‘000’	Shs ‘000’	Shs ‘000’	Shs ‘000’
Fixed assets:		2,800		2,900
Goodwill		16,800		12,000
Freehold Land & building		5,860		6,350
Plant & Machinery (NBV)		3,600		3,750
Investment at cost		29,060		25,000
Current Assets:	10,050		8,700
Stock	6,140		7,800
Accounts receivable	1,710		840
Investment	200		430
Cash at hand & bank	18,100		17,770
Current Liabilities:	(2,390)		(6,540)
Bank overdraft	(5,850)		(5,250)
Account Payable	(450)		(380)
Proposed dividends	(820)		(600)
Taxation	(9,510)		(12,770)
		8,590		5,000
Net current assets		37,650		3,000
15% Debentures		(7,500)		(9,000)
		30,150		21,00
Capital and Reserves:
Authorized, issued & paid Sh. 10		18,000		15,000
Ordinary shares		1,500		750
Share premium		4,500		-
Revaluation reserve		6,150		5,250
Retained Profit		30,150		21,000

The profit and loss appropriation account for the year ended 31 March 2018 is given below:

	Shs. ‘000’	Shs. ‘000’
Net profit before tax		2,400
Less: Corporation tax		900
Profit after tax		1,500
Dividends:
Interim (Paid)	150
Proposed (Paid)	450	600
		900

The following additional information is provided:

1. Profit for the year is arrived at after charging:

	Shs. ‘000’
Depreciation on plant & machinery	1,150
Goodwill amortization	420

2. During the year, plant with a net book value of Sh. 750,000 was sold for Sh, 1,470,000. The plant had originally cost Sh. 3,000.000.
3. The investments portfolio was reduced by selling one block of shares at a profit of Sh. 160,000.

Required:

Cash flow statement in accordance with IAS 7.

Answer 1

Answer :

Particulars	($)	($)
Profit before Interest and taxes		2,400
Cash from Operating Activities :
Add:
Depreciation	1,150
Amortization	420
Increase in Current Asset	(1,350)
Decrease in Stock	1,660
Increase in Accounts receivable	(870)
Decrease in Current liabilities	(4,150)
Increase in Accounts Payable	70
Corporation tax paid	(900)
Net Cash outflow from operating Activities		(3970)
Cash from Investing Activities:
Sale of plant	1,470
Purchase of Plant (3,750 -750-3600)	(600)
Sale of Land	490
Sale of Fixed Assets	100
Net cash Inflow from Investing Activities		1,460
Cash Flow from financing Activities:
Redemption of Debenture (9000-7500)	(1500)
Issue of Shares (750-1500)	750
Sale of Investment (430+160-200)	390
Profit on sale of Investment	(160)
		(520)
Net Cash flow for the year		(600)
Cash at the beginning		(5250)
Cash at the End		(5850)