Prepare a cash flow statement in acceptable form for Peak Ltd for the year ended 31 December
Question:
Prepare a cash flow statement in acceptable form for Peak Ltd for the year ended 31 December 20X5.
The following additional information is available:
• A market issue of shares was made on 1 January 20X5.
• During 20X5 equipment originally purchased at £65,200 was sold for £17,900, accumulated depreciation being £37,700. The difference on disposal had been taken to the income statement.
• Buildings costing £100,000 had been purchased during 20X5 and the depreciation charged for the year 20X5 on other assets was £25,000. The only assets revalued during the year were the buildings.
• Dividends received amounted to £7,500 and interest received £15,000 during 20X5 both of which had been credited to the income statement.
• The debentures were issued on 1 January 20X5 and all interest due had been paid.
Required
(a) Prepare the cash flow statement for the year ended 31 December 20X5 in a form suitable for publication.
(b) Summarise the main conclusions arising from the cash flow produced for Peak Ltd.
(c) Comment on the usefulness of the cash flow statement to users of financial statements.
(d) Support your answer by relevant articles.
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