Income Statement for the year to 31 December 2016 1,300,000 (830,000) 470,000 Di

Question

Income Statement for the year to 31 December 2016 1,300,000 (830,000) 470,000 Distribution and Admin expenses (70,000) 40,000) 360,000 (90,000) 270,000 Turnover Cost of sales Gross profit Interest Expense Profit before tax Tax expense Net profit for the year Statement of Financial Position extracts at 31 December 2016 2016 2015 Current assets Inventories Trade receivables 170,000 125,000 244,000 260,000 55,000 70,000 Prepayments Current liabilities Trade payables Tax payable Accruals 188,000 65,000 28,000 162,000 40,000 15,000 You are given the following information (i) Distribution and administration expenses include depreciation of £24,000 and amortization of £8,000 (ii) During the year the company disposed of an item of plant for £30,000, which had a net book value of £21,000. The profit on disposal had been netted off in Distribution and administration expenses within Income Statement. (ii) Accruals balance include interest payable of £18,000 on 31 Dec 2016 and £8,000 on 31 Dec 2015

Explanation / Answer

Statement of Cash Flows (Partial) (Indirect Method) For the Year ended Dec 31, 2016 Cash Flow from opearating activities: Net Income            270,000 Add/(Less) non cash effects on operating activities Depreciation expense           24,000 Amortization Expense              8,000 Gain on Sale of Part of Plant           (9,000) Increase in Inventories         (45,000) Decrease in Trade Receivables           16,000 Decrease in Prepayments           15,000 Increase in Trade Payables           26,000 Increase in Tax Payable           25,000 Increase in Accruals           13,000              73,000 Net Cash provided by operating activities            343,000

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