Question
The following information relates to Ezekiel Limited for the year ended 30 June 2020. Profit and loss account for the year to 30 June 2020
The following information relates to Ezekiel Limited for the year ended 30 June 2020.
Profit and loss account for the year to 30 June 2020
| K | K |
Gross profit |
| 253,000 |
Administrative expenses | 83,600 |
|
Loss on sale of vehicle | 3,300 |
|
Increase in provision for doubtful debts | 1,100 |
|
Depreciation | 38,500 | 126,500 |
Net profit |
| 126,500 |
Taxation |
| 71,500 |
|
| 55,000 |
Dividends |
| 27,500 |
Retained profit from the year |
| 27,500 |
Statement of Financial Position as at 30 June 2020
| 2019 | 2020 | ||
| K | K | K | K |
Non-Current Assets |
|
|
|
|
Motor Vehicle at Cost |
| 150,000 |
| 200,000 |
Less depreciation |
| 75,000 |
| 100,000 |
|
| 75,000 |
| 100,000 |
Current Assets |
|
|
|
|
Inventory |
| 60,000 |
| 50,000 |
Trade receivables | 80,000 |
| 100,000 |
|
Less: Provision for bad and doubtful debts | 4,000 | 76,000 | 5,000 | 95,000 |
Cash |
| 6,000 |
| 8,000 |
|
| 217,000 |
| 253,000 |
Current Liabilities |
|
|
|
|
Trade payables | 60,000 |
| 53,000 |
|
Taxation | 52,000 |
| 65,000 |
|
Proposed dividend | 20,000 | 132,000 | 25,000 | 143,000 |
Capital and Reserves |
|
|
|
|
Ordinary share capital | 75,000 |
| 75,000 |
|
Profit and Loss account | 10,000 | 85,000 | 35,000 | 110,000 |
|
| 217,000 |
| 252,000 |
Additional information:
1. The company purchased some new vehicles during 2020 for K75, 000.
2. During 2020 the company also sold a vehicle for K12, 000 in cash. The vehicle had originally cost K25,000 and K10, 000 had been set aside for depreciation.
Required:
- Prepare a statement of cash flows for Ezekiel Limited for the year ended 30 June 2020.
- Outline what it tells the managers of Ezekiel Limited.
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