Topic: Cash Flow Statements
QUESTION ONE - The account details are provided to you for Darwin Ltd for the year ending 30 June 2019 (with comparatives).
Darwin Ltd Statement of Profit and Loss and Other Comprehensive Income for the Year ending 30 June 2019
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2018
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2019
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$
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$
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Sales for the Year (all on credit)
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700 000
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885 000
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|
|
|
|
Less Expenses Incurred for Year
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|
|
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Cost of Goods Sold
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200 000
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240 000
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Depreciation - Buildings
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20 000
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20 000
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Depreciation - Plant
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60 000
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70 000
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Doubtful Debts
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30 000
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40 000
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Electricity and Rates
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20 000
|
45 000
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Income Tax
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76 000
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84 000
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Interest Expense
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10 000
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11 000
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Salaries and Wages Expense
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200 000
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270 000
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Total Expenses
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540 000
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696 000
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Net Profit Before Tax
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160 000
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189 000
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Less Income Tax Expense
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76 000
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84 000
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Net Profit for the Year
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84 000
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105 000
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Darwin Ltd Statement of Financial Position as at 30 June 2019
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2018
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2019
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$
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$
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Current Assets
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|
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Cash
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176 000
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239 000
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Accounts Receivable
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220 000
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280 000
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Allowance for Doubtful Debts
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-30 000
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-40 000
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Inventory
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90 000
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100 000
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Deferred Tax Asset
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.....
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4 000
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456 000
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583 000
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Non Current Assets
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|
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Land
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100 000
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250 000
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Buildings
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400 000
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400 000
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Accumulated Depreciation - Buildings
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-40 000
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-60 000
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Plant and Equipment
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400 000
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420 000
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Accumulated Depreciation - Plant
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-40 000
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-40 000
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820 000
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970 000
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TOTAL ASSETS
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1276 000
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1 553 000
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Creo Ltd Statement of Financial Position as at 30 June 2019 (cont.)
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2018
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2019
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$
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$
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Current Liabilities
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|
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Trade Creditors
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80 000
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70 000
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Salaries and Wages Payable
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10 000
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20 000
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Income Tax Payable
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76 000
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88 000
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166 000
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178 000
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Non Current Liabilities
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|
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Long Term Loans
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100 000
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130 000
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|
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|
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Shareholders' Funds
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|
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Share Capital
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400 000
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500 000
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Revaluation Surplus
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Nil
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30 000
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Retained Earnings
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610 000
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715 000
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1 010 000
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1 245 000
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TOTAL LIABILITIES AND SHAREHOLDERS' FUNDS
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1276 000
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1 553 000
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Additional Information
- The trade creditors account is used for the purchase of inventory.
- The company tax rate is 40%.
Required
(i) Prepare the statement of cash flows (operating activities only) showing all workings including the reconstruction of all relevant ledger accounts for the year ending 30 June 2019.
(ii) Prepare the reconciliation of operating profit to operating cash flows for the year ending 30 June 2019 showing all workings.
Topic: Statement of Cash Flows
QUESTION TWO - The following information is provided to you for Yee Ltd for the year ending 30 June 2019:
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$
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Accounts Receivable 1 July 2018
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930 000
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Accounts Receivable 30 June 2019
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840 000
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Trade Creditors 1 July 2018
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270 000
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Trade Creditors 30 June 2019
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330 000
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Tax Payable 1 July 2018
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150 000
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Tax Payable 30 June 2019
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60 000
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Cost of Goods Sold
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1 350 000
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Bad Debts Expense
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165 000
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Discount received for early payment to suppliers
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90 000
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Credit Sales for the Year
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3 300 000
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Tax Expense
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15 000
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Rent Expense Paid
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51 000
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Insurance Expense Paid
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21 000
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Dividends Paid
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189 000
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Inventory 1 July 2018
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204 000
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Inventory 30 June 2019
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450 000
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Discounts provided to customers for early payment
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330 000
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Sales Returns
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300 000
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Proceeds from sale of delivery vehicle
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90 000
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Required - Reconstructing any ledger accounts as required, prepare an extract of the cash flow statement for Yee Ltd for the year ending 30 June 2019 - operating activities only.
Topic: Statement of Cash Flows
QUESTION THREE- Horace Ltd has provided you with an extract of the statement of financial position (with comparatives) as at 30 June 2019 with comparatives.
Horace Ltd Statement of Financial Position (with comparatives) Extract as at 30 June 2019
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2018
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2019
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Current Assets
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|
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Cash
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125 000
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175 000
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Accounts Receivable
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150 000
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200 000
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Less Provision for Doubtful Debts
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-17 500
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-25 000
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Inventory
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55 000
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70 000
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312 500
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420 000
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Non Current Assets
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Land
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325 000
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437 500
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Buildings
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75 000
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75 000
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Less Accumulated Depreciation
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-30 000
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-45 000
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Plant and Equipment
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137 500
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125 000
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Less Accumulated Depreciation
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-27 500
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-60 000
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480 000
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532 500
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TOTAL ASSETS
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792 500
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952 500
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Current Liabilities
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|
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Trade Creditors
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62 500
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67 500
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Accrued Expenses
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12 500
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5 000
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Income Tax Payable
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57 500
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62 500
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530 000
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135 000
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|
|
|
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Non Current Liabilities
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|
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Long Term Loans
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50 000
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50 000
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TOTAL LIABILTIES
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182 500
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185 000
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Additional Information for the year ending 30 June 2019
- profit after tax amounted to $75 000
- non cash expenses/income included:
- depreciation of plant and equipment $32 500
- depreciation of buildings $40 000
- profit on sale of plant and equipment $2 500
Required - Prepare a reconciliation of operating profit to operating cash flows for Horace Ltd for the year ending 30 June 2019.
Topic: Earnings per Share
QUESTION FOUR - For the year ending 30 June 2019, David Ltd reported net profit after tax amounting to $840 000. At the beginning of the year 1 July 2018, David Ltd had 700 000 ordinary shares as well as a total of 96 000, $1, 15% cumulative preference shares outstanding. On 1 December 2018 the company issued another additional fully paid ordinary shares by way of a rights issue. The right provided an additional share for every 5 held and required payment of $1.10. The last cum rights share price was $1.40. The basic earnings per share for the year ended 30 June 2018 was $1.20.
Required
(i) Calculate the basic earnings per share for the year ending 30 June 2019.
(ii) Calculate the adjusted comparative earnings per share for 2018 to be disclosed in the financial statements for the year ending 30 June 2019.
Topic: Earnings per Share
QUESTION FIVE - For the year ending 30 June 2019, Woo Ltd earned a net profit after tax amounted to $1 500 000. Dividends on 300 000 convertible, cumulative preference shares amounted to $600 000. As at 1 July 2018, 500 000 fully paid ordinary shares had been issued. There were no additional shares issued during the year ending 30 June 2019.
As at 1 July 2019 there were also:
- $225 000 in convertible debentures, which incurred interest at a rate of 7.5% per year and which could be converted to 112 500 ordinary shares at the option of the debenture holder
- 22 500 ordinary share options currently on issue with an exercise price of $1.05
- 300 000 convertible, cumulative preference shares issued in 2016 which could be convertible into a total of 120 000 ordinary shares at the option of the preference shareholders
Additional Information - The company tax rate is 30% and the average market price for ordinary shares during the year was $1.50.
Required - Calculate diluted earnings per share for the year ending 30 June 2019. Show all workings and each of the five steps required in determining diluted earnings per share for the year ending 30 June 2019.
Topic:Translation of Foreign Operations
QUESTION SIX - On 1 July 2018 Neville Ltd, an Australian company acquired all of the issued shares of Oakie Ltd, a company based overseas. The presentation currency is in Australian dollars. Relevant exchange rates for the year ending 30 June 2019 are as follows:
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1 July 2018
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FC$1.00 = A$0.65
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Average Rate for the Year
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FC$1.00 = A$0.80
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Ending inventory acquired before year end
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FC$1.00 = A$0.85
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30 June 2019
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FC$1.00 = A$0.95
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FC = Foreign Currency
The statement of profit and loss and other comprehensive income for the year ending 30 June 2019 and statement of financial position as at 30 June 2019 for Oakie Ltd is provided below. The financial statements are stated in the appropriate foreign currency (FC) which represents the functional currency of the foreign operation.
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Oakie Ltd Statement of Profit and Loss and Other Comprehensive Income for year ending 30 June 2019
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FC$
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FC$
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Sales Revenue
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15 000
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Less Cost of Goods Sold
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|
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Inventory 1 July 2018
|
2 000
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Add Purchases
|
7 500
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Less Inventory 30 June 2019
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-1 125
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Cost of Goods Sold
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8 375
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Gross Profit
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6 625
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Selling Expenses
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-600
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Depreciation - Plant and Equipment
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-200
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Operating Profit before income tax
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5 825
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Less Income tax expense
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-1 750
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Net Profit after tax
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4 075
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Other Comprehensive Income
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-
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Total Comprehensive Income
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4 075
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Oakie Ltd Statement of Changes in Equity for year ending 30 June 2019
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Share Capital FC$
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Retained Earnings FC$
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Balance at 30 June 2018
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6 000
|
500
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From Statement of Profit and Loss and Other Comprehensive Income
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-
|
4 075
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Balance at 30 June 2019
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6 000
|
4 575
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Oakie Ltd Statement of Financial Position as at 30 June 2019
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FC$
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Shareholders' Equity
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|
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Share Capital
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6 000
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Retained Earnings
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4 575
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Liabilities
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|
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Accounts payable
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|
450
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Long-term loan
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|
1 400
|
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Total equity and liabilities
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12 425
|
|
|
|
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Current assets
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|
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Cash
|
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3 000
|
|
Inventory
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|
1 125
|
|
Non-current assets
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|
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Plant and equipment
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|
8 950
|
|
Less Accumulated depreciation
|
|
-650
|
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Total assets
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12 425
|
Additional information:
- All revenues and expenses were earned or incurred evenly throughout the year.
- All plant and equipment was purchased using a long-term loan when the exchange rate was FC$1.00 = A$0.70.
- Inventory was purchased evenly over the period, with the inventory on hand at the end of the year purchased over the quarter ending on 30 June.
Required -
(i) Prepare a translation of the statement of profit and loss and other comprehensive income from the functional currency into the presentation currency (Australian dollars).
(ii) Prepare a statement of changes in equity for Oakie Ltd from the functional foreign currency into the presentation currency (Australian dollars)
(iii) Calculate the gain (or loss) on the translation from the functional foreign currency into the presentation currency.
(iv) Prepare a translation of the statement of financial position of Oakie Ltd as at 30 June 2019 from its functional currency into the relevant presentation currency (Australian dollars).
Attachment:- Assignment Files.rar