Reference no: EM132304938
PRACTICAL EXERCISE - Cash flow statement
You have recently been appointed as accountant of FUNKY LIZARD Limited, a company that specializes in teenager fashions. The statement of financial positions on 31 December 2018 and 2017 are presented to you:
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FUNKY LIZARD LIMITED
STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2018
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2018
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2017
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ASSETS
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Non-current assets
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Land and buildings
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250 000
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150 000
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Machinery
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225 000
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160 000
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Cost
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300 000
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200 000
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Accumulated depreciation
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(75 000)
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(40 000)
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Current assets
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Inventories
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65 000
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45 000
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Debtors
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79 545
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62 500
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Less: Provision for bad debts
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(9 545)
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(7 500)
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Investment
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75 000
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75 000
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Bank
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55 000
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15 000
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Total assets
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740 000
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500 000
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EQUITY AND LIABILITIES
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Capital and reserves
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Ordinary shares (2017 : 150 000 shares)
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336 250
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150 000
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Revaluation reserve
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45 000
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-
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Replacement reserve
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25 000
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15 000
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Retained earnings
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90 000
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25 000
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Non-current liabilities
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10% Interest bearing loan: PABSA-bank
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225 000
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285 000
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Current liabilities
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Creditors
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6 250
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9 500
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Dividends payable
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7 500
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12 000
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Taxation payable
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5 000
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3 500
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Total equity and liabilities
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740 000
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500 000
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ADDITIONAL INFORMATION:
1. On 1 January 2018 Funky Lizard issued 75 000 ordinary shares at $1,15. 25 000 of these shares were issued in return for a new machine with a cost price of $28 750 (on 1 January 2018). This new machine is included in the balance of machinery for 2018 and the depreciation for the year on this machine has also been taken into account correctly.
2. Funky Lizard Limited had an increase in cashflow and paid off a portion of the PABSA loan on 31 December 2018.
3. During the year Funky Lizard Limited sold a machine which was used to manufacture buttons, since zips are currently more fashionable. This machine was sold at a $15 000 profit and had a cost price of $45 000 and accumulated depreciation of $30 000 on the date of the sale.
4. Another machine had to be written off during the year when a model did irreparable damage to it in a rage. This machine had a cost price of $12 000 and accumulated depreciation of $10 500 when it was written off. Funky Lizard Limited sold the machine as scrap to a scrapyard for R650. All new machinery was purchase to replace these two machines.
5. The acquisition of land and buildings was done to open a new show room in Cape Town.
6. During 2018 Funky Lizard Ltd paid provisional tax for the 2018 year amounting to $3 900.
7. An interim dividend of 10c per shares was declared and paid by Funky Lizard Limited on 31 May 2018.
8. On 30 June 2018, Funky Lizard Ltd issued more shares at $1 per share.
9. A final dividend was declared on 31 December 2018
10. Dividends received during the year amounted to $11 500.
11. The taxation expense for the year is $8 900.
12. Revenue for 2018 amounted to $300 000.
REQUIRED:
Prepare the statement of cash flows of Funky Lizard Limited for the year ended 31 December 2018 using the Indirect method.
Please note: Round off all figures to the nearest Dollar.