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Question 2 - MFAC73116 Class Parctice - Cash Flow

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19 views2 pages

Question 2 - MFAC73116 Class Parctice - Cash Flow

Uploaded by

bonolo.moilwe
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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FINANCIAL ACCOUNTING 3A (MFAC73116) - 2024

CLASS PRACTICE QUESTION 2: CASH FLOW STATEMENT

QUESTION
The following information was taken from the records of North Limited:

STATEMENT OF FINANCIAL POSITION AT 28 FEBRUARY 2008

2008 2007
R R
Assets
Non-current assets (note 2) 552 000 500 000
Investments ----- 25 000

Current assets 178 000 141 000


Inventory 75 000 63 000
Debtors 85 000 57 000
Bank 18 000 21 000

Total assets 730 000 666 000

Equity and liabilities


Ordinary share capital (R1 share) 340 000 290 000
Revaluation on land and buildings 30 000 ----
Retained earnings 182 000 145 000
General reserve 40 000 30 000
Non-current liabilities
Redeemable preference shares 40 000 60 000
5% Debentures (note 1) 25 000 45 000
Current liabilities
Creditors 40 000 59 000
South African Revenue Service 13 000 22 000
Shareholders for dividends 20 000 15 000
Total equity and liabilities 730 000 666 000

Additional Information

(a) Calculation of retained earnings


Notes 2008
Profit before taxation 4 91 500
Taxation 25 000
Profit attributable to shareholders 66 500
Preference dividends (6 000)
Profit attributable to ordinary shareholders 60 500
Transfer to general reserve (10 000)
Ordinary dividends (13 500)
Retained earnings for the year 37 000
Retained earnings at the beginning of the year 145 000
Retained earnings at the end of the year 182 000

Page 1 of 2
(b) Notes to the financial statements for the year ended 28 February 2008

1. Debentures were redeemed at the beginning of 2008.


2. Non-current assets
2008
Gross carrying Accumulated Carrying amount
amount depreciation
Land and
buildings at 350 000 350 000
valuation
Machinery 284 250 82 250 202 000
634 250 82 250 552 000

2007
Gross carrying Accumulated Carrying amount
amount depreciation
Land and
buildings at 300 000 300 000
valuation
Machinery 265 000 65 000 200 000
565 000 65 000 500 000

3. Machinery with a cost price of R30 750 was sold and replaced during the year
ended 28 February 2008.

4. Included in the net profit before taxation were the following:


R
Dividends received 500
Profit on sale of investments 5 000
Interest on debentures 1 250
Depreciation 39 750
Loss on sale of machinery 2 250
Administrative and selling expenditure 70 750

5. Sales for the year ended 28 February 2008 amounted to R500 000 and cost
of sales amounted to R300 000.

REQUIRED
A. Prepare the statement of cash flows of North Ltd for the year ended 28 Feb
2008 in accordance with the requirements of IAS 7.

B. Show the note for the reconciliation of the profit before taxation with the cash
generated from operating activities.

Page 2 of 2

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