ACC - ABC Limited’s Cash Flow Statement Problem

Practical Question: (10 marks)

ABC Limited’s Balance Sheet as at 30 June 2013 and 2014 were as follows:
ABC Limited’s Balance Sheet as at 30 June
2014
ASSETS
Current Assets
Petty Cash
Accounts Receivable
Provision for Doubtful Debts
Inventory

2013

150
100,000
(10,000)
152,750
242,900

100
53,750
(5,000)
91,250
140,100

12,500
30,000
(17,500)
150,000
(27,750)
147,250
390,150

5,000
30,000
(15,000)
103,500
(13,500)
110,000
250,100

86,250
14,650
7,500
108,400

29,500
18,100
3,000
50,600

Owners’ Equity
Share Capital
Asset Revaluation Reserve
General Reserve
Retained Profits
Total Equity

192,500
7,500
42,500
39,250
281,750

150,000
25,000
24,500
199,500

TOTAL LIABILITIES AND OWNERS’ EQUITY

390,150

250,100

Non-Current Assets
Land
Buildings
Accumulated Depreciation – buildings
Plant & Equipment
Accumulated Depreciation – plant & equipment
TOTAL ASSETS
LIABILITIES AND OWNERS’ EQUITY
Current Liabilities
Bank Overdraft
Accounts Payable
Current Tax Payable

AYB200 Financial Accounting
Tutorial 11

The company’s Income Statements for the year ended 30 June 2013 and general ledger revealed the following information:
$
Net Sales
Cost of Goods sold
Gross Profit
Proceeds from sale of plant & equipment
Discount received
Gross profit
Expenses:
Carrying amount of equipment sold
Salaries and wages expense
Depreciation expense - buildings
Depreciation expense - plant & equipment
Electricity expense
Doubtful debts expense
Net Profit before tax
Income tax expense
Net Profit after tax

22,500
30,125
2,500
19,250
1,500
15,000

$
275,000
138,500
136,500
23,750
375
160,625

90,875
69,750
26,250
43,500

Additional Information:
1. Plant and equipment which had originally cost $27,500 and had been depreciated by $5,000, was sold during the year for $23,750
2. The company pays income tax in one payment.
3. The land was revalued upwards during the year by $7,500.
4. During the year, a dividend of $11,250 was paid. ABC Limited classifies dividends paid as a financing activity.
5. All purchases and sales were made on credit.
Required:
Prepare the “Cash flows from Operating Activities” part of the Cash Flow Statement for the year ended 30 June 2014, in accordance with AASB 107. You may use the reconstruction of the T-accounts or formula method. Show all workings.