QUESTION 6 The financial statements of JR are given below: Statement of Financial Position as at: 31 Oct 2010 ROOOROOO 31 Oct 2009 R000 R000 Financial Accounting 2 Page 8 of 13 Non-current Assets Property, plant and equipment Development expenditure 4,676 4,248 417 494 5,093 4,742 606 456 1,989 3,051 8,144 509 372 205 1 086 5,828 3,780 2,180 1,420 620 Current Assets Inventory Trade receivables Cash and cash equivalents Total Assets Equity and Liabilities Equity shares of R1 each Share premium Revaluation reserve Retained earnings Non-current liabilities Long term borrowings Deferred tax Current liabilities Trade payables Current tax Accrued interest Provision for redundancy costs Total Equity and Liabilities 560 1,314 7,074 260 1,250 4,310 360 715 210 570 170 885 425 310 70 5 500 170 3 633 0 150 8,144 5,828 Statement of Comprehensive Income for the year ended 31 October 2010 R000 R000 Revenue 6,640 Cost of sales (3.530) 3,110 Administrative expenses (2,040) Distribution costs (788) (2 828) 282 Finance cost (16) 266 Taxation 120 Profit for the year 146 Other Comprehensive Income Gain on revaluation of property, plant and equipment 300 446 Additional information: (0) On 1 November 2009, RA issued 1,600,000 R1 ordinary shares at a premium of 50%. No other finance was raised during the year. Financial Accounting 2 Page 9 of 13 (ii) (iv) (v) (vi) JR paid a dividend during the year. Plant and equipment disposed of in the year had a net book value of R70,000 cash received on disposal was R66,000. Any gain or loss on disposal has been included under cost of sales. Cost of sales includes R145,000 for development expenditure amortised during the year. Depreciation charged for the year was R250,000 The income tax expense for the year to 31 October 2010 is made up as follows: R000 Corporate income tax 80 Deferred tax 40 120 (vii) During the year to 31 October 2009 JR set up a provision for redundancy costs arising from the closure of one of its activities. During the year to 31 October 2010, JR spent R177,000 on redundancy costs, the additional cost being charged to administrative expenses. Required: (a) Prepare a statement of cash flows, using the indirect method, for JR for the year ended 31 October 2010, in accordance with IAS 7 Statement of Cash Flows. (25 marks)