Question
4
[15
marks]
Lunar Company (Pty) Ltd‘s balance sheetsfor the last two years are provided below
Balance Sheets
Cash
2013
R 82,000
2012
R 40,000
Accounts Receivable
180,000
150,000
Inventory
170,000
200,000
Equipment
200,000
140,000
Accum. Depreciation
(72,000)
(60,000)
Total Assets
R560,000
R470,000
AccountsPayable L/T Notespayable
R100,000 100,000
R 80,000
50,000
Ordinary Shares
250,000
250,000
Retained Earnings
110,000
90,000
Total Liabilities &
Shareholders’Equity
R560,000
R470,000
The company’s income statement for2013 is provided below:
Income Statement 2013
Sales R345,000
Expenses:
Cost of Goods Sold R120,000
Operating Expenses 58,000
Depreciation Expenses 20,000
Interest Expense 2,000
200,000
Operating Income 145,000
Gain on Sale-- Equipment* 5,000
Income before Taxes 150,000
Tax Expense 30,000
Net Income R120,000
*The company sold equipment for R57, 000 that had a cost of R60, 000
Required:
Prepare the company’s Statement of Cash flows for 2013. Use the direct methodof computing cash flows fromoperating activities.
| Cash Flow statement for the year ended 2013 | |||
| Cash flow from operating activities | |||
| Cash received from customers | 315000 | ||
| Cash paid for cost of goods sold | -120000 | ||
| Cash paid for operating expenses | -58000 | ||
| Cash paid for interest expense | -2000 | ||
| Cash paid for income tax expense | -30000 | ||
| Net cash flow from operating activities | 105000 | ||
| Cash flow from Investing activities | |||
| Proceeds from sale of fixed assets | 57000 | ||
| Purchase of fixed assets | -120000 | ||
| Net cash flow from Investing activities | -63000 | ||
| Cash flow from Financing activities | |||
| Proceeds from issue of share capital | - | ||
| Net cash flow from Financing activities | - | ||
| Total cash flows | 42000 | ||
| Opening Cash | 40000 | ||
| Closing cash | 82000 | ||
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