Question

QUESTIONS 4 AND 5 ARE BASED ON THE FOLLOWING INFORMATION: INFORMATION

Corel Ltd’s Statement of Comprehensive Income for the year ended 31 December 2018 and Statement of Financial Position as at 31 December 2017 and 2018 are as follows:

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2018

	R
sales(all credit)	2 304 000
cost of sales	(1 228 000)
gross proft	1 076 000
other operating income	84 000
	1 160 000
distribution expenses	(260 000 )
admin expenses	(104 000)
operating profit	796 000
interest income	68 000
interest expense	(92 000)
profit before tax	772 000
income tax	(184 000)
profit after tax	588 000

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER:

ASSETS    2018    2017 R R

Non-current assets    2 264 000    2 200 000

propety,plant and equipment:

land and buildings    964 000 964 000

plant and machinery    1 300 000    1 236 000

Current assets    720 000 660 000

inventiries 164 000    176 000

trade and other receivables(all accounts receivables)400 000 424 000

cash and cash equivalents 156 000 60 000

Total assets 2 984 000    2 860 000

EQUITY AND LIABILITIES

Equity 1 452 000 704 000

ordinary share capital    960 000 600 000

retained earnings    492 000 104 000

Non-current liabilities    1 000 000    1 600 000

long-term borrowings 1 000 000 1 600 000

Current liabilities 532 000 556 000

trade and other payables    440 000 492 000

SARS: Income tax    92 000 64 000

Total equity and liabilities 2 984 000 2 860 000

Additional information 1. Additional plant and machinery were purchased during 2018. There were no other non-current asset acquisitions or disposals. Depreciation for the year amounted to R316 000.

2. An interim dividend of R200 000 was paid on ordinary shares during the year.

3. The return on equity for 2017 was 18%

REQUIRED

Use the information provided above to prepare the Cash Flow Statement of Corel Limited for the year ended 31 December 2018.

Answer 1

Solution:

COREL's Ltd
Statement of Cash Flows
For the Year ending December 31, 2018 (Indirect method)
Particulars	Details	Amount
Cash Flow from Operating Activities:
Net Income		588000.00
Adjustments to reconcile net income to cash flow from operating activities:
Depreciation	316000.00
Decrease in Trade and Other receivabes (424000 -400000)	24000.00
Decrease in Inventory (176000-164000)	12000.00
Decrease in trade and other payable (492000-440000)	-52000.00
Increase in Income Tax payable (92000-64000)	28000.00
Total Adjustments		328000.00
Net Cash Flow From Operating Activites (A)		916000.00
Cash Flow from Investing Activities:
Purchase of Plant Asset & Machinery [(1236000-316000)-1300000]	-380000.00
Net Cash Flow From Investing Activites (B)		-380000.00
Cash Flow from Financing Activities:
Dividend paid	-200000.00
Repayment of Long Term borrowings (1600000-1000000)	-600000.00
Proceeds from issue of common stock [960000-600000]	360000.00
Net Cash Flow From Financing Activites (C)		-440000.00
Total Cash flow from all activities (A+B+C)		96000.00
Cash & cash Equivalent at the beginning of the year		60000.00
Cash & cash Equivalent at the end of year		156000.00