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Question 1 Note: Part 3 has 2 questions make sure you copy both questions from this page. Practical Questions (H) Question 1: Statement of Cash

Question 1

Note: Part 3 has 2 questions make sure you copy both questions from this page.

Practical Questions (H)

Question 1: Statement of Cash Flows (25 Marks)

The following summarised information from Lumberjack Spratt Ltd is provided

Lumberjack Spratt Ltd Summarised Comparative Statement of Financial Position as at 30 June 2018

2018

2017

$

$

Cash

931,301

437,807

Receivables

315,715

111,840

Allowance for Doubtful Debts

(6,315)

(2,237)

Interest Receivable

6,524

6,524

Inventory

503,280

335,520

Office Supplies

15,844

8,854

Prepaid Insurance

10,485

5,825

Investments (long term)

559,200

326,200

Plant and Equipment

1,118,400

1,048,500

Accumulated depreciation

(361,150)

(333,190)

3,093,284

1,945,643

Accounts payable

354,917

128,150

Accrued interest

15,145

11,650

Current tax payable

156,873

27,960

Accrued Expenses - Electricity

11,650

18,640

Borrowings

291,250

186,400

Share capital

1,281,500

932,000

Retained earnings

981,949

640,843

3,093,284

1,945,643

Lumberjack Spratt Ltd Summarised Statement of Profit and Loss and Other Comprehensive Income' for the year ended 30 June 2018

$

Sales

2,300,875

Cost of Sales

(1,165,000)

Gross profit

1,135,875

Distribution Costs

(174,750)

Administration Costs

(423,070)

Interest Expense

(15,145)

Profit before tax

522,910

Income Tax Expense

(156,872)

Profit for the year

366,038

Other comprehensive income

Interest Revenue

6,524

Gain on sale of Equipment

3,495

Total comprehensive income

376,057

Additional information

  1. A dividend of $34,950 was paid during the year.
  2. Equipment that had an original cost of $46,600 and a carrying amount of $4,660 was sold during the year for $8,155. New equipment costing $116,500 was purchased on 28 June 2018.
  3. Depreciation Expenses are included as a part of Distribution Expenses.
  4. The Allowance for Doubtful Debts represents 2% of receivables outstanding; Doubtful debts expenses are included in Administration Expenses.
  5. Insurance Expenses of $17,475 are included in Administration Expenses. Electricity Expenses of $29,265 are included as a part of Administration Expenses.
  6. Supplies expensed during the year were $5,277 and are included as a part of Administration Expenses.
  7. Interest Revenue relates to long term investments.

Required:

  1. Using the Direct Method prepare a Statement of Cash Flows for the year ended 30 June 2018. Show all workings. (19 Marks)
  2. Prepare a note that explains the difference between the net cash from operating activities and the profit after tax for the year ended 30 June 2018. (6 Marks)

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