Question

QUESTION ONE [25]

The following financial information relates to Cams Limited.

Statement of Financial Position as at 31 December 2017 and 2018

		2018                                2017
Ordinary share capital Retained earnings Property, plant and equipment Investments Debentures 12.5%   Inventory Trade debtors Prepaid expenses Trade creditors Bank overdraft SARS (income tax) Shareholders for dividends	400 000                             55 000                            230 000                           165 000                              20 000                           124 000                             37 000                               -                            25 000                             21 000                               5 000                               30 000		295 000                    5 000                195 000                 110 000                   60 000                 120 000                    28 500                      1 500                    42 500                    25 000                      7 500                     20 000

Statement of comprehensive income for the year 31 December 2018                       R
Profit before interest and tax Depreciation on equipment Dividends received on investments Interest on dividends Income tax	149 500 5 000 18 000 7 500 50 000

Statement of changes in equity for the year ended 31 December 2018 R

Dividends on ordinary shares                                             R 60 000

Note no. 1 for the year ended 31 December 2017 and 2018

Property, plant and equipment                                      2018 (R)               2017 (R)

Land and building at cost                                                 200 000                 160 000

Equipment at carrying value                                               30 000                35 000

                                                                                          230 000              195 000

Additional information

1. No equipment was purchased or sold during the financial year ended 31 December 2018

2. Ordinary shares were issued during the year.

Required:

Use the information provided above to prepare the cash flow statement for the year ended 31 December 2018.

Answer 1

IN THE BOOKS OF CAMS LTD

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2018

PARTICULARS	R	R
PROFIT BEFORE INTEREST AND INCOME TAX	149500
ADD: DEPRECIATION ON EQUIPMENT	5000
ADD: INCREASE IN CURRENT LIABILITIES	0
ADD: DECREASE IN CURRENT ASSETS PREPAID EXPENSES	1500
LESS: DECREASE IN CURRENT LIABILITIES TRADE CREDITORS BANK OVERDRAFT	(17500) (4000)
LESS: INCREASE IN CURRENT ASSETS INVENTORY	(4000)
TRADE DEBTORS	(8500)
LESS: INCOME TAX PAID	(50000)
NET CASH FROM OPERATING ACTIVITIES (A)		72000
CASH FLOW FROM INVESTING ACTIVITIES
PURCHASE OF LAND AND BUILDING	(40000)
PURCHASE OF INVESTMENTS DIVIDENDS RECEIVED ON INVESTMENTS	(110000) 18000
NET CASH FROM INVESTING ACTIVITIES (B)		(132000)
CASH FLOW FROM FINANCING ACTIVITIES
ISSUE OF SHARES	105000
REDEMPTION OF DEBENTURES	(40000)
PAYMENT OF DIVIDEND	(60000)
INTEREST ON DEBENTURES	(7500)
NET CASH FROM FINANCING ACTIVITIES (C)		(2500)
CASH FLOW DURING THE YEAR (A+B+C)		(62500)