Question 2

You are provided with figures extracted from the financial statements of Laloo Limited

Information:

Laloo Limited

Statement of Comprehensive Income for the year ended 31 December 2021

Sales

Directors remuneration Bad debts

Audit fees Depreciation Operating profit Interest expense

Net profit before tax Income tax

Net income after tax

10,000,000 (1,400,000) (100,000) (130,000) (200,000) 1,700,000 (170,000) 1,530,000 (610,000) 920,000

Laloo Limited

Statement of Financial Position as at 31 December

2021 2020

5,120,000

5,000,000 120,000 2,380,000

Assets Non-current assets

Fixed assets (Note 1) Shares in SM (Pty) Ltd

Current assets

2021 7,150,000

7,000,000 150,000 2,140,000

Inventories

Trade and other receivables Cash and cash equivalents

Total Assets

Shareholders Equity and Liabilities

Ordinary shareholders equity

Ordinary share capital (issued @ R5.00)

Share premium

Retained income

Non-current liabilities

Loan from AK Limited

Current liabilities

Creditors

Total Equity and Liabilities

1,300,000 790,000 50,000 9,290,000

6,670,000

5,000,000 800,000 870,000 1,440,000 1,440,000 1,180,000 1,180,000 9,290,000

1,100,000 1,200,000 80,000 7,500,000

5,150,000

4,000,000 600,000 550,000 1,160,000 1,160,000 1,190,000 1,190,000 7,500,000

Vehicles -

- -

?

Notes to the Financial Statements Land &

Equipment

? ?

800,000 350,000

Total

5,000,000 ?

?

1. Fixed Assets

Carrying value at beginning of year Cost

Accumulated depreciation Movements

Additions at cost

buildings

2,700,000 2,700,000 -

-

Depreciation for the year Disposals at carrying value Carrying value at end of year Cost

Accumulated depreciation

2. Cash and Cash Equivalents

Bank Cash float

3. Retained Income

- -

? - ?

2,100,000 ? 2,100,000 ? - -

? 7,000,000 ? ?

? ?

2021 2020

48,000 80,000

2,000 -

50,000 80,000 2021 2020

550,000 600,000 920,000 450,000 (600,000) (500,000) 870,000 550,000

688,000 738,000 30,000 50,000 62,000 94,000 400,000 308,000 1,180,000 1,190,000

(200,000) 400,000

A portion of the land and buildings were sold at book value. The vehicles were purchased on the last day of the accounting period and all the depreciation relates to equipment.

Retained income at beginning of year Net profit after tax

Dividends paid and declared

Retained income at end of year

4. Trade and Other Payables

Trade creditors

Expenses payable (Interest on loan*) SARS (Income tax)

Shareholders for dividends

* Interest on loan is not capitalised

Required:

2.1. Fill in the missing figures in the note to the Statement of financial position for Fixed assets. (5)

2.2 Prepare the Cash Flow Statement for the year ended 31 December 2021. (5)

2.3 The business bought a significant amount of new fixed assets. What did they buy and how did they pay for these fixed assets? Provide figures to support your answer.