The following information relates to the draft financial statements of Pound Plc. Income statement for the...

  

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The following information relates to the draft financial statements of Pound Plc. Income statement for the year ended 31 December 2016. Revenue Cost of sales Gross profit Administration and Distribution expenses Operating profit before interest Interest expense Profit after interest Taxation Profit after interest and tax Statement of financial position as at: Non-current assets Tangible assets Current assets Inventory Trade receivables Cash and cash equivalents Total Assets Equity and Liabilities Share capital Share premium Retained earnings Non-current liabilities Long term loans Current liabilities Trade payables Tax payable Total Equity and Liabilities 31 December 2016 420 270 3,150 £,000 760 110 2,360 905 1,455 ***** £,000 £,000 2,500 1,075 1,035 3,840 6,340 2,000 400 2,220 4,620 380 850 870 6,340 110 925 31 December 2015 £,000 370 250 1,950 640 95 £,000 2,100 2,570 4,670 1,500 200 1,585 3,285 650 735 4,670 Additional information: a) During the year to 31 December 2016, Pound Plc sold some non-current assets for £110,000 in cash. The historic cost and net book value of these assets at that date were £200,000 and £150,000 respectively. b) Depreciation charge on tangible non-current assets at year-end amounted to £100,000. c) A final dividend of £150,000 has been proposed but remained unpaid at the year end. Required: 4.1 Prepare a cash flow statement for Pound Plc. for the year ended 31 December 2016 using BOTH the indirect and direct methods. Note: for the direct method, you only need to prepare 'cash flows from operating activities' as the other sections will be similar to the indirect method. (25%) 4.2 With reference to IAS 7 - Statement of Cash Flows, briefly compare and contrast the direct and indirect methods of preparing cash flow statements. (5%) (Total 30%) The following information relates to the draft financial statements of Pound Plc. Income statement for the year ended 31 December 2016. Revenue Cost of sales Gross profit Administration and Distribution expenses Operating profit before interest Interest expense Profit after interest Taxation Profit after interest and tax Statement of financial position as at: Non-current assets Tangible assets Current assets Inventory Trade receivables Cash and cash equivalents Total Assets Equity and Liabilities Share capital Share premium Retained earnings Non-current liabilities Long term loans Current liabilities Trade payables Tax payable Total Equity and Liabilities 31 December 2016 420 270 3,150 £,000 760 110 2,360 905 1,455 ***** £,000 £,000 2,500 1,075 1,035 3,840 6,340 2,000 400 2,220 4,620 380 850 870 6,340 110 925 31 December 2015 £,000 370 250 1,950 640 95 £,000 2,100 2,570 4,670 1,500 200 1,585 3,285 650 735 4,670 Additional information: a) During the year to 31 December 2016, Pound Plc sold some non-current assets for £110,000 in cash. The historic cost and net book value of these assets at that date were £200,000 and £150,000 respectively. b) Depreciation charge on tangible non-current assets at year-end amounted to £100,000. c) A final dividend of £150,000 has been proposed but remained unpaid at the year end. Required: 4.1 Prepare a cash flow statement for Pound Plc. for the year ended 31 December 2016 using BOTH the indirect and direct methods. Note: for the direct method, you only need to prepare 'cash flows from operating activities' as the other sections will be similar to the indirect method. (25%) 4.2 With reference to IAS 7 - Statement of Cash Flows, briefly compare and contrast the direct and indirect methods of preparing cash flow statements. (5%) (Total 30%)

Answer rating: 100% (QA)

41 Cash Flow Statement for Pound Plc for the Year Ended 31 December 2016 CALCULATIONS Cash Flows from Operating Activities 000 Profit before interest and tax 1455000 Adjustments for Depreciation 10000... View the full answer