Question 1 [40 Marks] DripTech Private Limited is a company that specialises in the manufacture and distribution of irrigation equipment. The information below was obtained from the books of DripTech (Pvt) for the financial ended 28 February 2021.

Additional information

1. The long-term borrowing bears interest at 12% per annum, payable in arrears, and was repaid on 31 August 2020. Interest did not qualify for capitalisation.

2. In August 2020, a piece of land that cost R15 000 was sold for its carrying amount and replaced with another piece of land. On 28 February 2021, the remaining land was revalued. These were the only transactions in respect of land and buildings for the current financial year.

3. During the current financial year, a machine with a carrying amount of R51 000 was sold at a loss of R8 000 and replaced with a new machine which cost R62 000. The total depreciation on plant and machinery for the current financial year amounted to R39 000.

4. A motor vehicle with a cost price of R14 400 on which depreciation of R7 400 had already been written off was traded in for R9 000 on a new vehicle that cost R35 000.

5. No other machines or motor vehicles were sold during the year, but one additional motor vehicle was purchased.

6. The provision for tax for the current financial year was R15 000. This includes an under- provision of R5 100 for the 2020 tax year.

7. New shares were issued on 31 December 2020.

8. On 31 July 2020, an interim ordinary dividend of 4c per share was declared and paid.

9. Ordinary dividends of 6c per share were declared on 28 February 2021.

10. The financial assets were sold at amortised cost on 1 March 2020. These shares were purchased without the intention of short-term profit taking as part of the business model.

11. During the year, dividends to the value of R3 000 were received.

REQUIRED

Prepare the Statement of Cashflow using the INDIRECT METHOD as at 29 February 2021. Show all the necessary workings.

Statement of Financial Position as at 28 February 2021 Land and buildings Plant and machinery Motor vehicles Financial assets at amortised cost Inventory Trade and other receivables Prepaid expenses Bank 2021 R 350 000 105 000 108 900 0 67 000 37 400 500 2 000 670 800 2020 R 340 000 124 000 67 300 25 200 50 000 50 000 2 600 0 659 100 Share capital (280000/250000 shares) Long-term borrowings Revaluation surplus - land and buildings Retained earnings 10%R200 Debentures Tax payable Ordinary dividends payable Accumulated depreciation - Plant and machinery - Motor vehicles Trade and other payables Accrued interest Bank overdraft 292 000 0 15 000 188 700 40 000 23 300 16 800 258 200 80 000 0 220 000 0 46 600 0 27 000 27 200 38 800 2000 0 670 800 18 000 10 000 26000 0 300 659 100 Statement of Comprehensive Income for the year ended 28 February 2021 Revenue Cost of sales Gross profit Other income Administrative expenses Selling expenses Other costs Finance cost Profit before tax Income tax expense PROFIT FOR THE YEAR Other comprehensive income for the year TOTAL COMPREHENSIVE INCOME FOR THE YEAR R 500 000 (250 000) 250 000 5 000 (141 800) (87 400) (8 000) (7 300) 10 500 0 10 500 0 10 500 Statement of Financial Position as at 28 February 2021 Land and buildings Plant and machinery Motor vehicles Financial assets at amortised cost Inventory Trade and other receivables Prepaid expenses Bank 2021 R 350 000 105 000 108 900 0 67 000 37 400 500 2 000 670 800 2020 R 340 000 124 000 67 300 25 200 50 000 50 000 2 600 0 659 100 Share capital (280000/250000 shares) Long-term borrowings Revaluation surplus - land and buildings Retained earnings 10%R200 Debentures Tax payable Ordinary dividends payable Accumulated depreciation - Plant and machinery - Motor vehicles Trade and other payables Accrued interest Bank overdraft 292 000 0 15 000 188 700 40 000 23 300 16 800 258 200 80 000 0 220 000 0 46 600 0 27 000 27 200 38 800 2000 0 670 800 18 000 10 000 26000 0 300 659 100 Statement of Comprehensive Income for the year ended 28 February 2021 Revenue Cost of sales Gross profit Other income Administrative expenses Selling expenses Other costs Finance cost Profit before tax Income tax expense PROFIT FOR THE YEAR Other comprehensive income for the year TOTAL COMPREHENSIVE INCOME FOR THE YEAR R 500 000 (250 000) 250 000 5 000 (141 800) (87 400) (8 000) (7 300) 10 500 0 10 500 0 10 500