Prepare a properly classified Cash Flow Statement for Sports Enterprises Ltd for the year ended 31st December 2011. Note that the Closing Cash at Bank Balance at 31st December 2011 is not provided - proper classification and preparation of the Cash Flow Statement will allow you to determine the closing cash balance. There is no need to provide calculations and explanations which underlie the Cash Flow Statement and the numbers therein.
The following information is provided in relation to Sports Enterprises Ltd (SEL) for the year ended 31st December 2011. This company has been in operation for 10 years.
1. In June 2011 SEL applied to SouthBank for a loan of $3,500,000 to assist in purchasing real estate for an expansion of its major store. The loan was approved on the 31st August 2011. Given that SEL had secured the funds to buy the real estate it could sign a contract to purchase the land. No deposit was payable on signing of the contract and the total cost of acquiring the real estate is $5,000,000 (including the $3,500,000 to be borrowed from SouthBank). This contract was signed on the 30 September 2011 with settlement on the real estate completed on the 31st January 2012.
2. Cash proceeds of $440,000 for real estate that SEL sold on the 30th November 2010 and settled on the 31st January 2011.
3. A major part of SEL's operations is the manufacture of high performance golf clubs. During 2011 some of SEL's golf making equipment became redundant and it decided to dispose of this equipment to a Non-Profit Junior Golf Clinic. The equipment was worth $230,000 and SEL decided to donate the equipment to the Clinic and this occurred on the 17th November 2011.
4. SEL has managed the effects of the world financial crisis well compared to other businesses. However, SEL did find it necessary to seek additional funds from its shareholders. During 2011 it issued $2,000,000 worth of new shares which was fully subscribed. Half of the money for these shares was received on the 30th September 2011 with the remaining amount due on the 30th June 2012.
5. On the 30th June 2008 SEL bought out a rival competitor buy acquiring all the shares of ABS Concepts Ltd. The total purchase price was $2,600,000. This was paid by the issue of $2,000,000 of SEL shares plus $600,000 cash and full settlement occurred on 30th June, 2011.
6. As a part of SEL's philanthropy it donated $150,000 cash to a Children's Charity on the 31st March 2011. While this has nothing to do with SEL's business operations it has a strong sense of community involvement.
7. On the 31st May 2011 SEL paid an interim dividend of $60,000. One-third of this was paid in cash and the remaining two-thirds by a share issue.
8. On the 30th April 2011 SEL exchanged $380,000 worth of real estate it owned for used plant and equipment from ABCD Limited. The accumulated depreciation on the plant and equipment by ABCD Limited was $125,650.
9. SEL has a significant share investment portfolio that was worth $25,789,654 at the 31st December 2011. During 2008 SEL received $1,189,500 in dividends of which 60% was in shares and the remainder in cash.
10. SEL sold its stake in AAFL Enterprises Ltd for $2,300,000 under a contract signed on the 31st December 2010. The cash was received on the 15th January 2011. The entire amount was used to repay a loan SEL had with the AAANZ Bank.
11. $135,000 worth of bonus shares received from SEL's share investments throughout 2011.
12. On the 25th August 2011 SEL received its income tax advice from the Australian Taxation Office (ATO) in respect of the 2010/11 income tax year. As a result it paid $239,000 income tax on the 31st October 2011. In addition, SEL was also advised by the ATO that it had made an error in its income tax returns for the 2008/09 and 2009/10 income tax years and that further income tax of $34,500 was payable as a result. This amount was also paid on the 31st October 2011.
13. SEL employs a considerable number of staff. For 2011 the wages bill amounted to $1,234,500 and all amounts were paid during the year. In addition, SEL introduced a staff bonus scheme during the year which are based on the year end results. This amounted to $38,930 and this was paid in the second week after year end.
14. Day-to-day operating expenses amounted to $3,576,981 for 2011 and no amounts were unpaid at year end.
15. SEL occupies six buildings which it does not own and pays rent. The rent on five of these totaled $875,000 for 2011, of which $76,000 remained unpaid at the 31st December 2011. All amounts were fully paid at the 31st December 2010. The rental agreement on the remaining (ie the sixth) building began on the 1st July 2011. This rent is $10,000 per month. An inducement to enter into this lease of waiving the first year's rent was given SEL.
16. SEL began an overdraft facility on 1/1/11 and had a total interest expense of $14,677 on its bank overdraft for the year. This interest is paid in arrears and is calculated on the 15th day of every month. The interest for the period 15/12/2011 to 31/12/2011 was $798.
17. SEL Cost of Goods Sold for 2011 was $6,789,324. All purchases of inventory were bought on credit.
18. SEL sales for 2011 were $10,387,902 of which $3,465,213 were cash sales and the remainder were credit sales.
19. The senior accountant for SEL invests excess cash during the year on the money market. Interest received on these investments amounted to $656,000 during 2011.
20. A final dividend for the 2011 year was declared by SEL on the 1st December 2011. This totaled $90,000 of which one-third is to be paid in cash and two-thirds via a share issues. Payment can only be made after SEL's annual general meeting in February 2012. The final dividend for 2010 was also paid under the same timing arrangements and the same proportions of cash and shares. The 2010 final dividend was $84,000.
21. A sale of excess motor vehicles by trade auction on the 12th June 2011 realised $87,550. The terms of settlement are that payment is to be made in full by bank cheque one month after the auction. The transaction was completed under those terms.
22. The Bank Balance at the 1st January 2011 was $(145,764) - ie SEL owed this amount to the Bank
23. The Accounts Receivable balance at the 1st January 2011 was $46,785
24. The Accounts Receivable balance at the 31st December 2011 was $36,705
25. The Accounts Payable balance at the 1st January 2011 was $21,354
26. The Accounts Payable balance at the 31st December 2011 was $8,452
27. The Inventory balance at the 1st January 2011 was $43,571
28. The Inventory balance at the 31st December 2011 was $29,989