Question

Grove Co started trading on 1 January 2018 with a medium-term 5% loan of €30,000 and...

Grove Co started trading on 1 January 2018 with a medium-term 5% loan of €30,000 and a share issue which raised €40,000. The company purchased non-current assets for €35,000, for which €25,000 was paid in cash and a note payable due in June 2019 was signed for €10,000. During the year to 31 December 2018 entered into the following transactions:

  1. Purchases from suppliers were €19,500, of which €2,500 was unpaid at the year-end.
  2. Wages and salaries amounted to €10,500, of which €700 was unpaid at the year-end.
  3. Interest on the loan of €1,500 was fully paid in the year and a repayment of the principal was made in the amount of €5,000.
  4. Sales revenue was €29,500, including €1,500 trade receivables at the year-end.
  5. Interest on cash deposits at the bank amounted to €80.

Use the following pro-forma to complete Grove Co’s statement of cash flows  by writing the appropriate amounts in the answer boxes. One amount (for interest received) has already been given. NB! Show negative amounts, i.e amounts indicating cash outflow in brackets, e.g. (100). Write the numbers only, do not write the euro symbol::

Grove Co

Statement of Cash Flows for the Year to 31 December 2018

Cash flows from operating activities

 €
Cash received from customers
Cash paid to suppliers
Cash paid to employees
Interest paid
Interest received 80
Net cash flows from operating activities

Investing activities
Acquisition of non-current assets

Financing activities
Proceeds from a share issue
Proceeds from a loan
Repayment of a loan
Net cash flows from financing activities
Net increase in cash
Cash at 1 January 2017 ---
Cash at 31 December 2017
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Homework Answers

Answer #1
CASH FLOW STATEMENT
Particulars $ $
Cash flows from operating activities
Cash received from customers 28000
Cash paid to suppliers (17000)
Cash paid to employees (9800)
Interest paid (1500)
Interest received 80
Net cash flows from operating activities (220)
Investing activities
Acquisition of non-current assets (25000)
Net cash flows from Investing activities (25000)
Financing activities
Proceeds from a share issue 40000
Proceeds from a loan 30000
Repayment of a loan (5000)
Net cash flows from financing activities 65000
Net increase in cash 39780
Cash at 1 January 2018 0
Cash at 31 December 2018 39780
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