The following summarized accounts have been prepared for Pill Limited:

Additional information:
There were no sales of fixed assets during the year ended 31 May 2005.
Required:

(a) Compile Pill Limited’s cash flow statement for the year ended 31 May 2005.

(b) What does it tell the managers of Pill Limited?

Transcribed Image Text:

Profit and loss account for the year ended 31 May 2005 Sales Less: Cost of goods sold Gross profit 2004 2005 000 000 2400 3000 1600 2000 800 1000 Less: Expenses: Administrative expenses 310 320 Depreciation: vehicles 55 60 furniture 35 40 400 420 Net profit 400 580 Taxation 120 150 280 430 Dividends 200 250 Retained profits for the year 80 180