Question 4

Use the information provided below to prepare the Cash Flow Statement of Rolex Limited for the year ended 31 December 2021.

INFORMATION

The following information was extracted from the records of Rolex Limited for the financial year ended 31 December 2021.

ROLEX LIMITED

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2021

R

Sales 4 140 000

Cost of sales (2 020 000)

Gross profit 2 120 000

Selling and administrative expenses (840 000)

Operating profit 1 280 000

Interest expense (80 000)

Profit before tax 1 200 000

Company tax (320 000)

Profit after tax 880 000

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER:

ASSETS

2021 (R) 2020 (R)

Non-current assets 3 740 000 2 940 000

Property, plant and equipment 3 440 000 2 940 000

Investments 300 000 0

Current assets 1 080 000 900 000

Inventories 480 000 500 000

Accounts receivable 510 000 320 000

Cash and cash equivalents 90 000 80 000

Total assets 4 820 000 3 840 000

EQUITY AND LIABILITIES Equity 3 120 000 2 600 000

Ordinary share capital 2 000 000 2 000 000

Retained earnings 1 120 000 600 000

Non-current liabilities 800 000 400 000

Long-term loan 800 000 400 000

Current liabilities 900 000 840 000

Accounts payable 480 000 560 000

Company tax payable 160 000 80 000

Dividends payable 260 000 200 000

Total equity and liabilities 4 820 000 3 840 000

Additional information

All purchases of inventories are on credit.

The selling and administrative expenses include depreciation of R320 000.

Property, plant and equipment were purchased during the year but there were no disposals.

The total dividends for the year ended 31 December 2021 amounted to R360 000.

The issued share capital consisted of 100 000 ordinary shares.

The market price of the shares on 31 December 2021 was R35.