ASSIGNMENT QUESTION 50 MARKS Kiwi Furniture Limited is a privately-owned New Zealand company that manufactures and distributes furniture. The company operates in Auckland and supplies its products to customers in the North island. Due to delays caused by the COVID-19 pandemic, Peter Schumacher, the accountant of the company could complete only the statement of comprehensive income and the statement of financial position for the year ended 30 June 2020. Peter has asked you to prepare the other two financial statements: Statement of Changes in equity and Statement of cash flows. You have been provided with the following financial statements and additional information. Kiwi Furnitures Ltd Statement of Comprehensive Income for the year ended 30 June 2020 2020 ($) 2019 ($) Sales 612,000 591,000 Less: Cost of Goods Sold 458,000 382,000 Gross profit 154,000 209,000 Other Income Interest Income 5,800 2,400 Profit on Sale of Plant 7,200 0 Less: Expenses Operating expenses 79,750 88,975 Employee expenses 21,560 13,500) Depreciation 21,800 19,650) Bad debts 16,000 2,000 Interest expenses 6,960 5,600 Total expenses 146,070 129,725) Net profit before tax 20,930 81,675 Less: Income tax expenses 9,100 31,980) Net profit after tax 11,830 49,695) Other Comprehensive Income Gain on revaluation of Land 12,750 3,600 Total Comprehensive Income 24,5801 53,295 Kiwi Furnitures Ltd Statement of Financial Position as at 30 June 2020 2020 ($) 2019 ($) Current assets Cash in the bank 5,000 17,000 Accounts receivables 210,000 159,000 Inventory 45,000 40,250 Total current assets 260,000 216,250 Non-current assets Land & Building Plant and machinery Furniture and Fixures Less: Accumulated depreciation Total Non-current Assets Total assets 242,750 120,000 170,000 (121000) 411,750 671,750 230,000 125,000 143,000 (106000) 392,000 608,250 Current liabilities Bank Overdraft Accounts Payable Income tax payable Dividend Payable Accrued Employee expenses Total current liabilities 16,000 109,000 35,000 7,000 9,920 176,920 102,000 46,000 5,000 12,000 165,000 Non-current liabilities Borrowings Total non-current liabilities Total liabilities 125,000 125,000 301,920 113,000 113,000 278,000 Net assets 369,830 330,250 Shareholders' equity Contributed Equity Land Revaluation Reserve Retained earnings Total shareholders' equity 280,000 49,000 40,830 369,830 240,000 36,250 54,000 330,250 2. 4. 5. Additional information: 1. The company undertook a share issue for cash during the year. No other transactions related to shares during the year. An interim dividend of $25,000 was declared in December 2019. Peter advises you to include dividend payments in the cash flow statement under financing activities. 3. Loan repayment during the year was $78,500. The land was revalued upwards by $12,750 as of 31 December 2019 and revaluation increment has been credited to Land Revaluation Reserve account. No land purchases and disposals during the year. A new plant costing $10,000 was purchased during the year, and machinery costing $15,000 was sold during the year. No disposal of Furniture and fixtures during the year. 7. All Sales and Purchases were on a credit basis. Interest Income was received as earned. All operating expenses and interest expenses were paid as incurred. 10. Employee expenses were accrued. You are advised to show payments to employees as a separate line item under operating activities in the cash flow statement. Income tax expenses were accrued. Peter suggests you to show interest received, interest paid, and income taxes paid under operating activities in the cash flow statement. 6. 8. 9. 11. 12. YOU ARE REQUIRED TO: (a) Prepare the Statement of Changes in Equity for the year ended 30 June 2020. Use the template provided in the answer booklet. [12 marks] (b) Prepare the Statement of Cash flows for the year ended 30 June 2020. Use the template provided in the answer booklet. Show all workings. [26 marks] (c) Peter is also saying that it is very likely additional funding will be required to operate the business over the next couple of months. Prepare a brief response, evaluating Peter's idea to go for "additional funding to operate the business over the next couple of months" in light of the company's cash flow information for the year ended 30 June 2020. In preparing your response, you should describe major factors contributing to cash flows during the year and include a conclusion concerning the management of cash from the cash flow statement data. The length of the response should be approximately 200 words. (+/- 20 words are allowed) (12 marks]