Look up the answer to End-of-chapter question 3.1. Using details of Abi’s assets and liabilities at the start of the trading year, her statement of profit or loss, her statement of financial position and her bank account summary for the year, present Abi’s statement of cash flows using both the direct and the indirect method for the year ended 31 August 2019.

Data from Exercises 3.1

Abi runs a market stall selling fashion clothing for cash. Her business bank account balance at 1 September 2018, the start of her most recent trading year, was £7,342. She also had inventory of £2,382 and trade payables of £3,445 on that date. She rents her market stall at an annual cost of £6,000 payable quarterly in advance from 1 September each trading year. Abi paid all the rent that was due during the year to 31 August 2019. Her cash receipts from sales to customers for the year to 31 August 2019 totalled up to £157,689, but she also gave refunds to customers for returned goods of £3,789. She paid the outstanding trade payables at 1 September 2018 on 5 September 2018. Her purchases for the year totalled up to £120,465, of which she paid £116,328 during the year to 31 August 2019. At 31 August 2019 Abi valued her inventory of clothing at a cost of £4,638. From 1 September 2018 she employed a part time assistant, Kate, agreeing to pay her £100 a week for the year. At the end of August 2019, while Abi had paid Kate all the amounts due for the first 50 weeks of the year, she still owed her £200 for the last two weeks of August 2019. To improve the presentation of her fashion clothing ranges, Abi paid £600 to buy some display stands on 1 September 2018. Abi reckons that these display stands will last her for three years and that they will have a scrap value of £30. On 31 August 2019, Abi had £650 in cash representing sales that had not yet been banked. Abi withdrew £1,500 a month for her own personal expenses from the business bank account.