Question

A summary of the financial statements of FB Ltd are as follows:

Abstract from Income Statement/Profit and Loss Account for the year ended 31 December 2018.

	£000
Operating profit	50,500
Interest payable	(2,500)
Profit before taxation	48,000
Taxation	(12,000)
Profit after taxation	36,000

Balance Sheets

	2018	2018	2017	2017
	£000	£000	£000	£000
Leasehold Property at cost	60,000		60,000
Accumulated depreciation	(18,000)		(12,000)
		42,000		48,000
Machinery at cost	96,000		82,000
Accumulated depreciation	(19,000)		(14,000)
		77,000		68,000
Current assets
Inventories/stocks	25,000		49,800
Trade receivables/debtors	32,800		22,600
Bank	20,400		0
		78,200		72,400
Current liabilities
Trade payables/creditors	19,800		31,200
Taxation payable	9,000		8,000
Interest accrued	400		200
Bank overdraft	0		1,000
Bank short term loan (3 months)	0		20,000
		(29,200)		(60,400)
Net Assets		168,000		128,000
Shareholders’ Funds
Share capital		60,000		40,000
Share premium		20,000		0
Retained profits		88,000		88,000
		168,000		128,000

You are given the following information:

1. During the year machinery which originally cost £20,000,000 and with accumulated depreciation of £8,000,000 was sold for £12,800,000.

2. Trade receivables are stated after provision for doubtful debts of £1,200,000 as at 31 December 2018 and £800,000 as at 31 December 2017.

3. Dividends were issued to the fullest extend available from current year profits.

REQUIRED:

Prepare the statement of cash flows for FB Ltd for the year ended 31 December 2018, using the indirect method, in accordance with IAS7.

Answer 1