Lerato's Lights Ltd is a business based in Gauteng, that buys and sells specialised energy- saving lighting
Question:
Lerato's Lights Ltd is a business based in Gauteng, that buys and sells specialised energy- saving lighting equipment. The company has a 31 December financial year-end. You have been provided with the following: Extract of the Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2022:
Rand Sales 2 482 461 Cost of Sales (1 090 688) Gross profit 1 391 773 Operating expenses 1 (430 585) Operating profit 619 209 Finance costs 2 ? Other income 3 50 400 Interest received 6000 Profit before tax ? Taxation (192 480) Profit for the year ?
Note 1: Operating expenses Net operating costs include the following: Rand Depreciation expense 55 200 Profit on sale of non-current asset 28 200
Note 2: Finance costs The company paid interest on loans, according to Note 6.
Note 3: Other income Other income consists of dividends received during the current financial year. Extract of the Statement of Financial Position as at 31 December 2022: Note 2022 2021 Current assets R R Trade Receivables 148 728 140 659 Prepaid expenses 13 800 15 960 Bank 1 971 162 443 145 Equity Share capital: Class A 4 ? 1 500 000 Retained earnings 5 ? 1 567 714 Non-current liabilities Loans 6 550 000 300 000 Current liabilities Trade payables 7 478 248 438 969 SARS (Income tax) 55 755 37 240 Accrued operating expenses 5 400 8 160
Note 4: Share capital: Class A The company had 360 000 issued shares in 2021. On 1 February 2022, Lerato's Lights Ltd offered Class A shares to the public at an issue price of R3 per share. No other shares were issued for the 2022 financial year. The shares were issued on 1 March 2022. Share issue costs amounted to R47 920. All share issue costs were paid in cash on the day that the shares were issued. The company had 648 000 issued shares by the end of 2022.
Note 5: Retained earnings (dividends) On 2 January 2022, the directors declared the only dividend for the financial year at a rate of 25 cents per share. The dividend was paid on 2 January 2022 (Ignore dividend tax).
Note 6: Loans The loan balance outstanding as at 31 December 2021, consists of a loan that has three annual repayments of R100 000 left. These annual payments together with interest are payable on 31 December. Interest is charged at 12% per annum. A second loan was raised on 30 June 2022, the loan bears interest at 9% per annum. The first interest and instalment on the loan will be repaid during the 2023 financial year.
Note 7: Payables Cash paid to suppliers for the 2022 financial year amounted to R1 303 054.
REQUIRED: Prepare the Statement of Cash Flows of Lerato's Lights Ltd for the financial year ended 31 December 2022, using the direct method. Ignore VAT and dividends tax for this question. Show all workings clearly (Always round up to the nearest rand where applicable.)
Accounting
ISBN: 978-0176509743
Volume 1, 2nd canadian Edition
Authors: Carl warren, James Reeve, Jonathen Duchac, Sheila Elworthy,