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Cash Flow Question

The document provides financial statements for Kaya plc for the year ended 31 December 20X7. It includes a statement of profit or loss, statement of financial position, and additional notes. The requirement is to prepare a statement of cash flows for Kaya plc using the information provided in the financial statements and notes.

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Chia Zen Chen
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61 views

Cash Flow Question

The document provides financial statements for Kaya plc for the year ended 31 December 20X7. It includes a statement of profit or loss, statement of financial position, and additional notes. The requirement is to prepare a statement of cash flows for Kaya plc using the information provided in the financial statements and notes.

Uploaded by

Chia Zen Chen
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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£

Net increase/decrease in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Note: The boxes in this question indicate where an answer is required and where marks are available
in the CBE. You can use the ‘add comment’ function to record your workings and answers.
Total: 16 marks

4 Kaya plc
The following are the draft financial statements for Kaya plc for the year ended 31 December 20X7.
Statement of profit or loss for the year ended 31 December 20X7

£
Revenue 7,350,500
Cost of sales (4,560,600)
Gross profit 2,789,900
Administrative expenses (1,060,800)
Distribution costs (768,000)
Operating profit 961,100
Investment income 25,000
Finance charge (75,000)
Profit before tax 911,100
Income tax (350,000)
Profit for the period 561,100

Statements of financial position as at 31 December 20X7 and 20X6

20X7 20X6
£ £ £ £
ASSETS
Non-current assets
Property, plant and equipment 6,985,400 6,713,500
Intangible assets 350,700 300,500
7,336,100 7,014,000
Current assets
Inventories 60,500 365,100
Trade receivables 169,000 144,500
Investments 25,000 12,400
Cash and cash equivalents 10,700 20,200
265,200 542,200
Total assets 7,601,300 7,556,200

142 Accounting ICAEW 2022


20X7 20X6
£ £ £ £

EQUITY AND LIABILITIES


Equity
Ordinary share capital 4,000,000 3,500,000
Share premium account 1,200,000 950,000
Retained earnings 1,342,800 2,206,700
6,542,800 6,656,700
Non-current liabilities
Preference share capital (redeemable) 500,000 400,000

Current liabilities
Trade payables 148,500 139,500
Income tax payable 410,000 360,000
558,500 499,500
Total equity and liabilities 7,601,300 7,556,200

The following additional information is relevant.


(1) During the year Kaya plc issued redeemable preference shares at par.
(2) The current asset investments are government bonds and management has decided to class
them as cash equivalents.
(3) During the year Kaya plc sold plant and equipment with a carrying amount of £560,500 for
£600,000. Total depreciation charges for the year were £750,600.
(4) Trade payables include accrued interest of £5,000 (20X6: £7,000).
(5) Kaya plc acquired new intangible assets at a cost of £77,500 during the year.
(6) Included in trade receivables is investment income of £14,500 (20X6: £2,000). Investment
income has been netted off against administrative expenses in the statement of profit or loss.
(7) An impairment review at 31 December 20X7 identified a fall in the recoverable amount of
intangible assets. As a result, an impairment loss of £15,000 was identified and written off to
administrative expenses.
(8) Included in trade payables is £10,000 which relates to the purchase of machinery.
(9) During the year Kaya plc made a 1 for 100 bonus issue of its ordinary shares.
Requirement
Prepare a statement of cash flows for the year ended 31 December 20X7 in accordance with IAS 7.

£
Cash flows from operating activities

Profit before tax

Investment income (W1)

Finance costs (W3)

Depreciation

Amortisation (W6)

ICAEW 2022 13: Statement of cash flows 143


£

Impairment charge

Gain/loss on sales of property, plant and equipment

Movement in inventories

Movement in trade receivables (W7)

Movement in trade payables (W5)

Cash generated from operations

Tax paid (W2)

Interest paid (W3)

Net cash from/used in operating activities

Cash flows from investing activities

Purchase of property, plant and equipment (W4)

Purchase of intangible assets

Proceeds from sale of property, plant and equipment

Net cash from/used in investing activities

Cash flows from financing activities

Proceeds from issue of shares (W8 and W9)

Movement in borrowings

Dividends paid (W10)

Net cash from/used in financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Note: The boxes in this question indicate where an answer is required and where marks are available
in the CBE. You can use the ‘add comment’ function to record your workings and answers.
Total: 16 marks

5 Siena plc
The following are the draft financial statements for Siena plc for the year ended 31 March 20X5.
Statement of profit or loss for the year ended 31 March 20X5

£
Revenue 5,650,500
Cost of sales (3,460,600)
Gross profit 2,189,900

144 Accounting ICAEW 2022

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