- 20 Marks
FA – L1 – Q102 – Statement of cash flows
Prepare a statement of cash flows for ZA Ltd for the year ended 31 May 20X9 using the indirect method per IAS 7.
Question
The statements of financial position for the last two years for ZA Ltd are shown below. ZA Ltd implemented an expansion programme during the year ended 31st May 20X9.
| 20X8 | 20X9 | |||
|---|---|---|---|---|
| GH¢ | GH¢ | GH¢ | GH¢ | |
| Non-current assets (net) | 380,000 | 530,000 | ||
| Current assets | ||||
| Inventory | 80,000 | 108,000 | ||
| Receivables | 32,000 | 37,000 | ||
| Bank | 13,000 | – | ||
| Cash | 1,000 | 3,000 | ||
| Total assets | 506,000 | 678,000 | ||
| Current liabilities | ||||
| Payables | 26,000 | 30,000 | ||
| Corporation Tax | 22,000 | 28,000 | ||
| Overdraft | – | 5,000 | ||
| Dividends | – | 21,000 | ||
| Accruals | – | 4,000 | ||
| Total liabilities | 68,000 | 88,000 | ||
| Capital and Reserves | ||||
| Ordinary shares | 350,000 | 490,000 | ||
| General reserve | 62,000 | 62,000 | ||
| Revaluation reserve | – | 10,000 | ||
| Retained earnings | 26,000 | 28,000 | ||
| Total capital and liabilities | 506,000 | 678,000 |
Additional information:
(i) The total depreciation provision incorporated in the statements of financial position was GH¢48,000 at 31st May 20X8 and GH¢122,000 at 31st May 20X9.
(ii) During the year ended 31st May 20X9 a non-current asset costing GH¢22,000 with a carrying amount of GH¢6,000 was sold for GH¢1,000. No other disposals took place.
(iii) The revaluation surplus represents a revaluation of premises during the year ended 31st May 20X9.
Required:
(a) Prepare a statement of cash flows for ZA Ltd for the year ended 31st May 20X9 in accordance with IAS 7. (Use the indirect method).
(b) State the effects of the expansion policy on ZA Ltd.
Answer:
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