QUESTION 2

Assume the correct cash receipts from customers is R800 000. Which of the following alternatives represents the correct amount that must be disclosed as cash generated from operations in the cash flows from operating activities section according to direct method in the statement of cash flows of Dolly Limited for the year ended 28

20.20 R 251 200 239 100 41 200 121 000 375 100 219 700 74 100 95 000 The information below relates to questions 1 17. The following information pertains to Dolly Limited. 1. Extract from ledger account balances as at 28 February: 20.21 R Share capital: Ordinary shares 308 600 Share capital: Preference shares 254 100 Retained earnings 50 900 Long-term loan - ABC Bank 84 700 Land and buildings at cost 399 300 Machinery and equipment at carrying amount 228 600 Inventory 83 100 Trade receivables control 104 800 Listed investments 146 900 Bank 17 200 Trade payables control 63 900 SARS (income tax) 62 700 Dividends payable 41 000 Dividends receivable 30 000 Accrued expenses (wages) 18 000 Prepaid expenses 10 300 Revenue 887 600 Cost of sales 416 600 Administrative, distribution and other expenses 157 100 Fair value gain on listed investments 7 500 Dividends income 18 900 Loss on sale of machinery and equipment 7 800 Income tax expense 48 700 Depreciation 13 600 Wages 82 300 Insurance expense 11 400 30 000 61 200 43 000 36 500 25 500 13 000 3 700 2. Additional information 2.1 The following pertains to property, plant and equipment 2.1.1 During the year machinery and equipment with a carrying amount of R35 000 was sold. This transaction has been correctly recorded. 2.1.2 Land and buildings with a cost price of R50 000 were sold for cash at the same amount. Land and buildings are not depreciated. 2.1.3 All purchases of property, plant and equipment pertained to replacements and were paid in full. 2.2 On 29 February 20.21 Dolly Limited declared ordinary shares dividend of 38 cents per share whilst the preference share dividends amounted to R20 800. 2.3 The interest expense on the long-term loan amounted to R8 500 and was added in the administrative, distribution and other expenses amount above. 2.4 On 31 August 20.20, when the total number of ordinary shares issued were 120 000 shares, the shareholders approved the capitalisation issue of one (1) ordinary share for every four (4) ordinary shares held. The capitalisation issue was done from retained earnings at R0,50 per share. All other issued shares were paid for in cash. QUESTION 2 Assume the correct cash receipts from customers is R800 000. Which of the following alternatives represents the correct amount that must be disclosed as cash generated from operations in the cash flows from operating activities section according to direct method in the statement of cash flows of Dolly Limited for the year ended 28 February 20.21? A. 218 400 B. 333 900 C. 205 900 D. 280 900 E. 133 200 F. 267 900