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    Illustrative Example - Cash Flow Statement

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    Nausheen
    1) T Tango prepared a statement of cash flows and reconciliation note for the year ended June 30, 2004 in accordance with accounting standards. 2) Key transactions included the sale of land for $10,000 profit and sale of plant equipment for $1,000 loss. 3) Cash flows from operating activities provided $10,800 after accounting for cash receipts, payments, and changes in working capital balances.

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    Illustrative Example - Cash Flow Statement

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    Nausheen
    36 views6 pages
    1) T Tango prepared a statement of cash flows and reconciliation note for the year ended June 30, 2004 in accordance with accounting standards. 2) Key transactions included the sale of land for $10,000 profit and sale of plant equipment for $1,000 loss. 3) Cash flows from operating activities provided $10,800 after accounting for cash receipts, payments, and changes in working capital balances.

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    1) T Tango prepared a statement of cash flows and reconciliation note for the year ended June 30, 2004 in accordance with accounting standards. 2) Key transactions included the sale of land for $10,000 profit and sale of plant equipment for $1,000 loss. 3) Cash flows from operating activities provided $10,800 after accounting for cash receipts, payments, and changes in working capital balances.

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    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    36 views6 pages

    Illustrative Example - Cash Flow Statement

    Uploaded by

    Nausheen
    1) T Tango prepared a statement of cash flows and reconciliation note for the year ended June 30, 2004 in accordance with accounting standards. 2) Key transactions included the sale of land for $10,000 profit and sale of plant equipment for $1,000 loss. 3) Cash flows from operating activities provided $10,800 after accounting for cash receipts, payments, and changes in working capital balances.

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    © All Rights Reserved
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    of 6

    Preparation of Cash Flow Statements

    Lecture Illustration 11.1

    Required:
    Prepare a statement of cash flows for the year ended 30th June 2004 in accordance with
    AASB 107;
    Prepare the note to the above statement reconciling net cash flows from operating
    activities with operating profit.

    The balance sheet figures for T Tango for the last two years are:

    T Tango
    Comparative Balance Sheets
    1st July 2003 30th June 2004
    Assets $ $ $ $
    Cash at Bank 6,700
    Accounts Receivable 9,000 10,300
    Inventory 26,000 30,000
    Plant & Equipment 13,000 20,000
    Less Acc'd depreciation 5,000 8,000 6,000 14,000
    Land 40,000 30,000
    Buildings 30,000 30,000
    Less Acc'd depreciation 10,000 20,000 12,000 18,000
    Total Assets 103,000 109,000
    Liabilities
    Accounts payable 20,000 24,000
    Bank overdraft 8,000
    Proprietorship
    T Tango - Capital 75,000 85,000
    103,000 109,000
    The Statement of Financial Performance for the year ended 30th June 2004 reveals the
    following details:
    T Tango
    Income Statement for year ended 30th June 2004
    $ $
    Revenue
    Sales 42,000
    Cost Of Goods Sold
    Cost of Goods Sold 24,000
    Gross profit 18,000
    Miscellaneous Revenue
    Gain on sales of land 10,000
    28,000
    Expenses
    Depreciation of plant & equipment 3,000
    Depreciation of buildings 2,000
    Loss on sale of plant 1,000
    Other expenses 5,900 11,900
    Operating Profit 16,100

    Additional information:

    During the year ended 30th June 2004, T Tango withdrew $50 per week for 52 week
    for private use.
    Tango also drew a personal cheque on the business to pay his income tax of $3,500.
    Land shown in the accounts at $10,000 was sold during the year for $20,000.
    Plant costing $5,000 and written down by $2,000 was sold for $2,000.

    Working Papers:
    T Tango - Working Papers

    Accounts Receivable
    Post Amount Post Amount
    Date Details Ref $ Date Details Ref $

    Balance 9,000 *Bank 40,700


    Sales 42,000 Balance 10,300
    51,000 51,000
    Balance c/d

    Inventory
    Post Amount Post Amount
    Date Details Ref $ Date Details Ref $

    Balance 26,000 COGS 24,000


    #Purchases 28,000 Balance 30,000
    54,000 54,000
    Balance c/d 30,000

    Accounts Payable
    Post Amount Post Amount
    Date Details Ref $ Date Details Ref $

    **Bank 24,000 Balance 20,000


    Balance 24,000 #Purchases 28,000
    48,000 48,000
    Balance c/d 24,000

    Capital
    Post Amount Post Amount
    Date Details Ref $ Date Details Ref $
    6,100
    drawings Balance 75,000
    Balance 85,000 Net profit 16,100
    91,100 91,100
    Balance c/d 85,000
    Plant
    Post Amount Post Amount
    Date Details Ref $ Date Details Ref $

    Balance 13,000 WDV 5,000


    #Bank 12,000 Balance 20,000
    25,000 25,000
    Balance c/d 20,000

    Accumulated Depreciation - Plant


    Post Amount Post Amount
    Date Details Ref $ Date Details Ref $
    2,000
    Balance 5,000
    Balance 6,000 dep 3,000
    8,000 8,000
    Balance c/d 5,000
    T Tango
    Statement of Cash Flows for the year ended 30th June 2004
    $ $
    Cash Flow From Operating Activities

    Cash receipts from customers 40,700


    Cash paid to supplies and employees(24000+5900) (29,900)
    Net increase in cash flows from operating activities 10,800
    Cash flow From Investing Activities

    Purchase of Property, plant and equipment (12,000)


    Proceeds from sale of PP&E (20,000+2,000) 22,000
    Net increase in cash. 10,000
    Cash Flow From Financing Activities

    Drawings paid (6,100)


    Net decrease in cash (6,100)
    Net increase in cash held 14,700
    (8,000)
    Cash at beginning of period
    $6,700
    Cash at end of period

    Reconciliation of Net Cash Provided by Operating Activities to Operating Profit.


    $

    Operating Profit 16,100

    Depreciation 5,000

    Gain on sale of land (10,000)

    Loss on sale of plant 1,000

    Increase in accounts receivable (1,300)

    Increase in inventories (4,000)

    Increase in accounts payable 4,000

    Cash provided by Operating Activities 10,800

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