QUESTIONS 4 AND 5 ARE BASED ON THE FOLLOWING INFORMATION: INFORMATION Corel Ltd’
ID: 2329460 • Letter: Q
Question
QUESTIONS 4 AND 5 ARE BASED ON THE FOLLOWING INFORMATION: INFORMATION
Corel Ltd’s Statement of Comprehensive Income for the year ended 31 December 2018 and Statement of Financial Position as at 31 December 2017 and 2018 are as follows:
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2018
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER:
ASSETS 2018 2017
R R
Additional information 1. Additional plant and machinery were purchased during 2018. There were no other non-current asset acquisitions or disposals. Depreciation for the year amounted to R316 000.
2. An interim dividend of R200 000 was paid on ordinary shares during the year.
3. The return on equity for 2017 was 18%
REQUIRED
Use the information provided above to prepare the Cash Flow Statement of Corel Limited for the year ended 31 December 2018.
R sales(all credit) 2 304 000 cost of sales (1 228 000) gross proft 1 076 000 other operating income 84 000 1 160 000 distribution expenses (260 000 ) admin expenses (104 000) operating profit 796 000 interest income 68 000 interest expense (92 000) profit before tax 772 000 income tax (184 000) profit after tax 588 000Explanation / Answer
Solution:
COREL's Ltd Statement of Cash Flows For the Year ending December 31, 2018 (Indirect method) Particulars Details Amount Cash Flow from Operating Activities: Net Income 588000.00 Adjustments to reconcile net income to cash flow from operating activities: Depreciation 316000.00 Decrease in Trade and Other receivabes (424000 -400000) 24000.00 Decrease in Inventory (176000-164000) 12000.00 Decrease in trade and other payable (492000-440000) -52000.00 Increase in Income Tax payable (92000-64000) 28000.00 Total Adjustments 328000.00 Net Cash Flow From Operating Activites (A) 916000.00 Cash Flow from Investing Activities: Purchase of Plant Asset & Machinery[(1236000-316000)-1300000] -380000.00 Net Cash Flow From Investing Activites (B) -380000.00 Cash Flow from Financing Activities: Dividend paid -200000.00 Repayment of Long Term borrowings (1600000-1000000) -600000.00 Proceeds from issue of common stock [960000-600000] 360000.00 Net Cash Flow From Financing Activites (C) -440000.00 Total Cash flow from all activities (A+B+C) 96000.00 Cash & cash Equivalent at the beginning of the year 60000.00 Cash & cash Equivalent at the end of year 156000.00