HELPING HAND The following reconciliation of profit before tax with cash generated from operations of Helping Hand Ltd has been correctly prepared for the year ended 30 June 20.20 Profit before tax R289 600 Adjustments: Dividend income (12 400) Depreciation 57 600 Loss on disposal of machinery 32 000 Interest expense 9 750 Working capital changes Decrease in expenses prepaid 2 500 Increase in provision for credit losses 4 800 Decrease in inventories 25 600 Increase in trade receivables (28 800) Increase in trade payables 53 760 Decrease in expenses payable (1 500) Cash generated from operations R432 910 Additional information: 1. Sales for the year amounts to R3 046 400. 2. The average mark-up used during the year was 30% on selling price. 3. The income tax expense for the year amounted to R86 880. 4. In addition to paying the balance of the outstanding tax on 1 July 20.19 (R41 600). the company paid provisional tax during the year of R45 000. 5. Dividends of R64 000 were declared during the year. The balance on the shareholders for dividends account was R33 600 on 1 July 20.19 and R38 400 on 30 June 20.20. 6. The balance in the trade payables account on 1 July 20.19 was R24 800. 7. The balances in the trade receivables and inventories accounts were R157 500 and R130 000 respectively on 30 June 20.20. 8. A debtor owing R107 000 as at 30 June 20.20 has been declared insolvent. Their lawyer has indicated that a payment of 55c in the rand is not expected to be paid to Helping Hand Ltd. On 30 June 20.20 the accountant wrote off the amount expected not to be collected. 9. The other income and expenses amounted to R624 320 for the year. This amount includes, amongst others, dividend income, loss on disposal of machinery, credit losses and interest expense. 10. The company borrowed R200 000 on 1 October 20.19 at an interest rate of 6,5% per annum. The interest is payable six monthly, commencing on 31 March 20.20 11. The following refer to the expenses prepaid and accrued expenses: 20.20 R 20.19 R Current assets: Expenses prepaid -rent 10 000 12 500 Current liabilities Accrued electricity expense 1 500 3 000 REQUIRED: Part A: Prepare the Operating activities section of the Statement of Cash Flows of Helping Hand Ltd for the year ended 30 June 20.20 in accordance with the requirements of IAS7, using the direct method. (Comparative figures are not required.) Part B: Complete the calculations to the Statement of Cash Flows of Helping Hand Ltd for the year ended 30 June 20.20. Part A: Prepare the Operating activities section of the Statement of Cash Flows of Helping Hand Ltd for the year ended 30 June 20.20 in accordance with the requirements of IAS7, using the direct method. (Comparative figures are not required.) Part B: Complete the calculations to the Statement of Cash Flows of Helping Hand Ltd for the year ended 30 June 20.20. PART A: HELPING HAND LIMITEDSTATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 20.20 NOTE RAND CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers Cash paid to suppliers and employees Cash generated from operations Not required Interest paid Dividends paid PART A: HELPING HAND LIMITEDSTATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 20.20 NOTE RAND CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers I Cash paid to suppliers and employees Cash generated from operations Not required Interest paid 1 Dividends paid Cash generated from operations Not required Interest paid 1 Dividends paid Dividends received | Income tax expense paid Net cash inflow from operating activities Not required PART B: Cash received from customers: Rand 3046400 Revenue Less: credit losses Net income Elimination of the Jeffect of accrual basis: Increase / decrease in receivables Answer in part (a) Taxation paid: Rand Opening balance - SARS Income tax Taxation provided Closing balance - SARS: Income tax Answer in part (a) Dividends paid: Rand Opening balance - shareholders for dividends Dividends declared Closing balance - shareholders for dividends Answer in part (a) Cash paid to suppliers and employees: Rand Net expenses for the year (including cost of sales) Removal of items that should appear separately in the statement of cash flow: Dividend income received Elimination of non- cash items: Credit losses Profit / Loss on disposal of machinery Interest expense Increase / Decrease in provision of credit llosses Increase / Decrease in provision of credit losses Depreciation Prepaid expense 30 June 20.20 Prepaid expense 1 July 20.19 Accrued electricity 1 July 20.19 Accrued electricity 30 June 20.20 Elimination of the effect of the accrual concept: Increase / Decrease in inventories Increase / Decrease in trade payables Answer in part (a) HELPING HAND The following reconciliation of profit before tax with cash generated from operations of Helping Hand Ltd has been correctly prepared for the year ended 30 June 20.20 Profit before tax R289 600 Adjustments: Dividend income (12 400) Depreciation 57 600 Loss on disposal of machinery 32 000 Interest expense 9 750 Working capital changes Decrease in expenses prepaid 2 500 Increase in provision for credit losses 4 800 Decrease in inventories 25 600 Increase in trade receivables (28 800) Increase in trade payables 53 760 Decrease in expenses payable (1 500) Cash generated from operations R432 910 Additional information: 1. Sales for the year amounts to R3 046 400. 2. The average mark-up used during the year was 30% on selling price. 3. The income tax expense for the year amounted to R86 880. 4. In addition to paying the balance of the outstanding tax on 1 July 20.19 (R41 600). the company paid provisional tax during the year of R45 000. 5. Dividends of R64 000 were declared during the year. The balance on the shareholders for dividends account was R33 600 on 1 July 20.19 and R38 400 on 30 June 20.20. 6. The balance in the trade payables account on 1 July 20.19 was R24 800. 7. The balances in the trade receivables and inventories accounts were R157 500 and R130 000 respectively on 30 June 20.20. 8. A debtor owing R107 000 as at 30 June 20.20 has been declared insolvent. Their lawyer has indicated that a payment of 55c in the rand is not expected to be paid to Helping Hand Ltd. On 30 June 20.20 the accountant wrote off the amount expected not to be collected. 9. The other income and expenses amounted to R624 320 for the year. This amount includes, amongst others, dividend income, loss on disposal of machinery, credit losses and interest expense. 10. The company borrowed R200 000 on 1 October 20.19 at an interest rate of 6,5% per annum. The interest is payable six monthly, commencing on 31 March 20.20 11. The following refer to the expenses prepaid and accrued expenses: 20.20 R 20.19 R Current assets: Expenses prepaid -rent 10 000 12 500 Current liabilities Accrued electricity expense 1 500 3 000 REQUIRED: Part A: Prepare the Operating activities section of the Statement of Cash Flows of Helping Hand Ltd for the year ended 30 June 20.20 in accordance with the requirements of IAS7, using the direct method. (Comparative figures are not required.) Part B: Complete the calculations to the Statement of Cash Flows of Helping Hand Ltd for the year ended 30 June 20.20. Part A: Prepare the Operating activities section of the Statement of Cash Flows of Helping Hand Ltd for the year ended 30 June 20.20 in accordance with the requirements of IAS7, using the direct method. (Comparative figures are not required.) Part B: Complete the calculations to the Statement of Cash Flows of Helping Hand Ltd for the year ended 30 June 20.20. PART A: HELPING HAND LIMITEDSTATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 20.20 NOTE RAND CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers Cash paid to suppliers and employees Cash generated from operations Not required Interest paid Dividends paid PART A: HELPING HAND LIMITEDSTATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 20.20 NOTE RAND CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers I Cash paid to suppliers and employees Cash generated from operations Not required Interest paid 1 Dividends paid Cash generated from operations Not required Interest paid 1 Dividends paid Dividends received | Income tax expense paid Net cash inflow from operating activities Not required PART B: Cash received from customers: Rand 3046400 Revenue Less: credit losses Net income Elimination of the Jeffect of accrual basis: Increase / decrease in receivables Answer in part (a) Taxation paid: Rand Opening balance - SARS Income tax Taxation provided Closing balance - SARS: Income tax Answer in part (a) Dividends paid: Rand Opening balance - shareholders for dividends Dividends declared Closing balance - shareholders for dividends Answer in part (a) Cash paid to suppliers and employees: Rand Net expenses for the year (including cost of sales) Removal of items that should appear separately in the statement of cash flow: Dividend income received Elimination of non- cash items: Credit losses Profit / Loss on disposal of machinery Interest expense Increase / Decrease in provision of credit llosses Increase / Decrease in provision of credit losses Depreciation Prepaid expense 30 June 20.20 Prepaid expense 1 July 20.19 Accrued electricity 1 July 20.19 Accrued electricity 30 June 20.20 Elimination of the effect of the accrual concept: Increase / Decrease in inventories Increase / Decrease in trade payables Answer in part (a)