The chief executive of Constitutional Referendum Ultimatum (CRU) Limited, a manufacturing company has received the following draft annual financial statements for the current year and is unable to determine from a reading of the statements of financial position and accompanying income statement the reasons for the changes in cash during the year. He asks you for assistance and presents the following balance sheets of the CRU Ltd.
|
March 31 2019 |
March 31 2020 |
Increase (Decrease) |
|
|
Ksh’000’ |
Ksh’000’ |
Ksh’000’ |
|
|
Assets |
|||
|
Land |
75,000 |
70,000 |
(5,000) |
|
Buildings |
280,000 |
405,000 |
125,000 |
|
Machinery |
100,000 |
165,000 |
65,000 |
|
Tools |
35,000 |
20,000 |
(15,000) |
|
Trade Investments |
7,500 |
9,000 |
1,500 |
|
Goodwill |
100,000 |
Nil |
(100,000) |
|
Inventories |
109,000 |
105,000 |
(4,000) |
|
Accounts receivable |
44,850 |
87,750 |
42,900 |
|
Bills receivable |
13,500 |
10,500 |
(3,000) |
|
Unexpired insurance |
1,950 |
1650 |
(300) |
|
Cash on hand |
4,500 |
1,000 |
(3,500) |
|
771,300 |
874,900 |
103,600 |
|
|
Equity and Liabilities |
|||
|
Share capital |
200,000 |
350,000 |
150,000 |
|
Accumulated profit |
391,900 |
268,550 |
(123,350) |
|
Debentures |
50,000 |
75,000 |
25,000 |
|
Accounts payable |
26,000 |
29,000 |
3,000 |
|
Bank overdraft |
4,000 |
4,000 |
|
|
Bills payable |
5,000 |
4,500 |
(500) |
|
Short term loan |
3,400 |
750 |
(2,650) |
|
Tax payable |
1,500 |
2,500 |
1000 |
|
Interest payable |
3,000 |
5,000 |
2,000 |
|
Accumulated depreciation |
90,500 |
135,600 |
45,100 |
|
771,300 |
874,900 |
103,600 |
Additional information:
(i) There were no purchases or sales of tools during the year.
(ii) The accounts receivable balances are net of an allowance for uncollectible debts of Ksh.1,150,000 and Ksh. 2,250,000 as at 31st March 2019 and 31st March 2020 respectively.
(iii) An old piece of machinery that had cost Ksh.2, 250,000 on the date of acquisition was scrapped and written off the books of account. Accumulated depreciation on the machinery was Ksh.1, 650,000.
(iv) CRU Limited issued shares during the year at a discount of 10%
(v) The income statement for the current year ended 31st March 2020 is as presented below:
Sh’000.
Sales (net) 625,000
Operating charges:
Materials and supplies 125,000
Direct labour 105,000
Manufacturing overhead 90,750
Depreciation 61,750
Selling expenses 122,500
General expenses 115,000
Interest expenses 3,750
Impairment of goodwill 100,000
Decrease in the value of land 5,000
Loss on machinery 600
Discount on issue of equity
shares 15,000 (744,350)
Net loss (119,350)
Required:
Prepare a statement of cash flows for CRU Limited for the year ended March 31 2020, in compliance with International Accounting Standard (IAS) number 7. Use the indirect method to determine the cash flows from operating activities.
Enjoy 24/7 customer support for any queries or concerns you have.
Phone: +1 213 3772458
Email: support@gradeessays.com