QUESTION TWO

The following information relates to ABC Pty Ltd, a business that manufactures electric products operating in Pretoria.

Statement of Financial Position Information as at 31 December 2015 and 2016

	2015 (R)	2016 (R)
Ordinary Shares Capital (R1)	400 000	500 000
Preference Share Capital (R0.50)	100 000	100 000
Share Premium	15 000	17 500
Retained Earning	25 000	115 000
Long Term Loan from AB bank	90 000	60 000
Land and Buildings at cost	300 000	320 000
Machinery and Equipment at cost	130 000	80 000
Machinery and Equipment: Accumulated Depreciation	43 000	49 000
Fixed Deposits (at Standard bank)	35 000	50 000
Inventory	31 000	50 000
Trade Debtors	40 000	35 000
Bank (Dr)	115 000	-
Petty Cash	5 000	5 000
Cash in Hand	-	4 500
Trade Creditors	18 000	25 000
Bank Overdraft	-	2 000
Income tax payable	15 000	13 000
Shareholders for dividends	15 000	25 000
Interest Payable	5 000	6 000

Extract of items disclosed in the Statement of Comprehensive Income for the year ended 31

December 2016:

Item	Amount (R)
Interest Income from fixed deposits	13 000
Depreciation Charge for the year	29 000
Loss of sale of machinery and equipment	1 500
Interest on long term loan	14 000
Income tax expense	47 000
Profit for the year	90 500
Ordinary dividends	20 000
Preference dividends	6 000

Additional Information:

No machinery and equipment were purchasing during the financial year. Machinery and equipment were sold for R85 500 of which R45 500 was on still outstanding.

The new property which was acquired is situated at Site 100 Thabo Sehume, Pretoria. The company plans to use it as its warehousing sites.

Inventory is recorded at cost.

The shares issued in March 2016.

Required:

Prepare the Statement of Cash Flows for ABC Pty Ltd for the year ended 31 December 2016 in compliance with the requirements of GAAP as stipulated in IAS 7.