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Practice Questions:
Question 1:
Rad Ltd sells vinyls and music related merchandise. For the year ended 30 June 2021, Rad Ltd recorded a Profit after tax of $32,000 after deducting from sales of $978,000 the following expenses: cost of sales $565,000, depreciation on buildings $80,000, bad debts $15,000, interest $35,000, discount allowed $3,000, other accrued expenses $200,100, and income tax $47,900.
The following additional information is available from Rad Ltd statement of financial position as at 30 June 2021:
|
| 2021 | 2020 |
|
| $ | $ |
| Accounts Receivable | 49,300 | 37,800 |
| Allowance for doubtful debts | (5,000) | (3,000) |
| Inventory | 94,200 | 96,600 |
| Prepaid expenses | 19,000 | 15,000 |
| Deferred tax asset | 12,000 | 14,400 |
| Accounts payable | 58,000 | 45,400 |
| Provision for employee benefits | 21,000 | 18,000 |
| Other accrued expenses | 23,500 | 25,000 |
| Interest payable | 40,000 | 20,000 |
| Current tax liability | 13,500 | 15,000 |
| Deferred tax liability | 22,000 | 20,900 |
Required:
Calculate and prepare Cash Flows from Operating Activities (an extract from the Statement of Cash Flows) in accordance with AASB107 for the year ended 30 June 2021 Use the direct method.
Question 2
Divine Ltd reported the following information for the year ended 30 June 2021:
|
| 2021 | 2020 |
|
| $ | $ |
| Land | 300,000 | 250,000 |
| Buildings | 650,000 | 175,000 |
| Accumulated depreciation | (235,000) | (100,000) |
| Plant | 570,000 | 490,000 |
| Accumulated depreciation | (280,000) | (175,000) |
| Asset revaluation surplus - land | 45,000 | 10,000 |
Additional information:
Land was revalued during the year. The tax rate is 30%.
Plant with a cost of $60,000 and an accumulated depreciation of $15,000 was sold for cash during the year. A gain on sale of plant $18,000 was recorded in the profit or loss statement.
Plant was also purchased during the year.
A new building was purchased: $350,000 was paid for by borrowing arrangements with the bank and the balance was paid in cash. There were no buildings sold.
Required:
Calculate and prepare Cash Flows from Investing Activities (an extract from the Statement of Cash Flows) in accordance with AASB107 for the year ended 30 June 2021.
Question 3
Pretty Ltd reported the following information for the year ended 30 June 2021:
|
| 2021 | 2020 |
| Bank overdraft | 9,000 | 4,500 |
| Dividend payable | 20,000 | 18,000 |
| Bank loan | 210,000 | 180,000 |
| Share Capital | 475,000 | 390,000 |
| Retained earnings | 176,500 | 210,000 |
| Profit after tax | 25,500 |
|
Additional information:
An interim dividend was paid during the year: $30,000 was paid by way of a bonus share issue, the remainder of the interim dividend was paid in cash.
Land was purchased during the year, with part payment made by taking out a bank loan of $50,000.
Repayments on bank loans for the year amounted to $40,000.
Required:
Calculate and prepare Cash Flows from Financing Activities (an extract from the Statement of Cash Flows) in accordance with AASB107 for the year ended 30 June 2021.
