Terrell Plc

Statement of profit or loss

For the year ended December 31, 20X7
£
Revenue
Cost of sales
Gross profit
Administrative expenses
Distribution costs
Profit from operations
Finance charge
Profit before tax
Income tax expense
Profit for the period
Terrell Plc
Comparative Statements of Financial Position

ASSETS
Non-current assets
Property, plant and equipment
Intangible assets

Current assets
Inventories
Trade receivables
Investments
Cash and cash equivalents

Total assets
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital
Share premium account
Retained earnings

Non-current liabilities
Preference share capital (redeemable )
Current liabilities
Trade payables
Taxation

Total equity and liabilities

Additional information:
1. During the year, Terrell 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 Terrell Plc sold plant and equipment with a carrying amoun
of £560,500 for £600,000. Total depreciation charges for the year were
£750,600.
4. Trade payables include accrued interest of £5,000 (at year end)( 20X6 £7,00
5. Terrell 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 £2,00
7. An impairment review at December 31, 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 Terrell Plc made a 1 for 100 bonus issue of its ordinary
shares.
Requirement: Prepare a statement of cash flows for the year ended December
31, 20X7 in accordance with IAS 7
 7,350,500
(4,560,600)
2,789,900
(1,060,800)
(768,000)
961,100
(75,000)
886,100
(350,000)
536,100

20x7 20x6
6,985,400 6,713,500
350,700 300,500
7,336,100 7,014,000

60,500 365,100
169,000 144,500
25,000 12,400
10,700 20,200
265,200 542,200
7,601,300 7,556,200
 4,000,000 3,500,000
1,200,000 950,000
1,342,800 2,206,700
6,542,800 6,656,700

500,000 400,000

148,500 139,500 note 8

410,000 360,000
558,500 449,500
7,601,300 7,556,200

eference shares at par. FCF

nds and management has C&E

ent with a carrying amount ICF

s for the year were
OCF
(at year end)( 20X6 £7,000) OCF
of £77,500 during the

of £14,500 (20X6 £2,000) OCF

ntified a fall in the OCF, ICF
an impairment loss of
ive expenses.
s to the purchase of OCF,ICF

us issue of its ordinary FCF

the year ended December

1 for 100 bonus issue share

100 old shares 400,000
get 1 new shares 4,000
OCF INDIRECT
profit before tax
1/ non cash items
depreciation exp
amortization exp
bad debts exp
imparment loss
finance cost

2/ non-operating items
gain on disposal PPE
investment income
3/ change in CA and CL
inventory
AR
AP
Interest paid
tax paid
NET OCF

interest payable
7,000

75,000
(77,000)
 5,000

ICF

PPE
6,713,500
10,000 560,500 note 3
750,600 note 3
x
1,573,000

6,985,400

BOOK ENTRIES
note 5
dr intangibale 77,500
x cr cash 77,500
note x
dr ppe 1,573,000
x cr cash 1,573,000
CF, ICF note 7
Dr impairment loss 15,000
cr intangible 15,000
x note 3
dr cash 600,000
cr gain 39,500
 cr ppe 565,000

present
cash receipt from disposal 600,000
cash payment for purchasing ppe (1,573,000)
cash payment for purchasing intangible (77,500)
NET ICF (1,050,500)

FCF

share capital
3,500,000
4,000
x
496,000

4,000,000

preference share
400,000

x
100,000
500,000

BOOK ENTRIES
1/ Dr dividend 1,400,000
cr cash 1,400,000

2/ dr cash 750,000
cr SC 496,000
cr SP 254,000
3/ dr cash 100,000
cr PS 100,000

present
cash receipt for PS 100,000
cash pmt for dividend (1,400,000)
cash receipt from share issue 750,000
NET FCF (550,000)
 886,100

750,600
12,300
-
15,000
75,000

(39,500) (Note 3)
14,500

304,600
(10,000)
(8,000)
(77,000)
(300,000)
1,623,600

interest exp tax payable

75,000 300,000
 intangible asset
300,500
77,500 15,000 note 7
note 5
x
12,300

350,700

12,300 amortization exp

 share preminum
950,000
4,000
x
254,000
(additional share issue)
1,200,000

dividend payable RE

X
1,400,000 1,400,000
 dr cash 600, cr gain 39500, cr ppe 560,500

tax payable tax exp

360,000
350,000 350,000

410,000
RE
2,206,700
NI
536,100
1,342,800
Arial Company
Comparative Statements of Financial Position
Nov-30
ASSETS OCF
Non-current assets profit before tax
Property, plant and
2,543,000 2,401,000 1/ non cash items
equipment
Intangible assets 550,000 584,000 depreciation exp
Investments 406,000 - amortization exp
3,499,000 2,985,000 bad debts exp
Current assets imparment loss
Inventories 685,000 598,000 finance cost
Trade receivables 480,000 465,000
Prepayments 96,000 126,000 2/ non-operating it
Cash and cash equivalents 426,000 200,000 gain on disposal PP
1,687,000 1,389,000 investment income
Total assets 5,186,000 4,374,000 3/ change in CA an
EQUITY AND
LIABILITIES inventory
Capital and reserves AR
Ordinary share capital 1,100,000 1,000,000 AP
Share premium account 342,000 200,000 Interest paid
Retained earnings 1,785,000 1,311,000 tax paid
3,227,000 2,511,000 NET OCF
Non-current liabilities
Borrowings 500,000 1,000,000
Redeemable preference
200,000 0
shares
700,000 1,000,000
Current liabilities
Trade payables 749,000 427,000
Accruals 108,000 131,000
Taxation 282,000 165,000
Provisions 120,000 140,000
1,259,000 863,000
Total equity and
5,186,000 4,374,000
liabilities
Arial Company
Statement of profit or loss
For the year ended November 30, 20X2
£
Revenue 5,762,000
Cost of sales -4,630,000
Gross profit 1,132,000
Distribution costs -236,000
Administrative expenses -127,000
Profit from operations 769,000
Finance charge -68,000
Investment income 55,000
Profit before tax 756,000
Income tax expense -232,000
Profit for the period 524,000

The following additional information is relevant:

1. Included within trade payables at November 30, 20X2 is £351,000 (20X1
£106,000) relating to purchases of PPE.
2. Included within accruals at November 30, 20X2 is £25,000 (20X1 £50,000)
for interest payable.
3. Property, plant and equipment and intangible assets can be analysed as
follows:
20X2 20X1
Property, plant and
equipment
Cost or valuation 7,464,000 6,375,000
Accumulated depreciation -4,921,000 -3,974,000
2,543,000 2,401,000
Intangibles
Cost 883,000 938,000
Accumulated amortization -333,000 -354,000
550,000 584,000
4. During the year, plant with an original cost of £479,000 and a carrying
amount at the date of disposal of £326,000 was sold for £424,000 which was
received in cash.
5. Arial Company received £20,000 during the year from the sale of highly
liquid investments, which were classed as cash equivalents.
6. During the year, Arial Company made a 1 for 20 bonus issue of its ordinary
shares. The subsequent issue of shares was made as a premium.
7. Included in trade receivables at the year ended was £25,000 in relation to
investment income. The corresponding figure for 20X1 was £15,000.
8. Intangible assets with accumulated amortisation at the date of disposal of
£40,000 were sold for £12,000. There were no acquisitions of intangible
assets during the year.
9. Redeemable preference shares in the amount of £200,000 were issued during
the year.
Requirement: Prepare a statement of cash flows for Arial Company for the year
ended November 30, 20X2 in accordance with IAS 7
profit before tax 756,000

1/ non cash items

depreciation exp
amortization exp
bad debts exp
imparment loss
finance cost

2/ non-operating items
gain on disposal PPE
investment income
3/ change in CA and CL

inventory

Interest paid
tax paid
NET OCF