A&T (Pty) Ltd (AT) was started by Ayanda and Thandeka in 2015 and sells bed linen to
Question:
A&T (Pty) Ltd (AT) was started by Ayanda and Thandeka in 2015 and sells bed linen to hotels throughout South Africa. The accountant, Mrs Dos Santos, is currently finalising the annual financial statements of AT for the year ended 30 June 2019 and has approached you to assist her with the preparation of the Statement of Cash Flows.
The following extracts of the trial balance was obtained from the accounting software package for 2019 and 2018:
A&T (Pty) Ltd Extract of the Trial balance for the years ended 30 June | 2019 R’ Debit/(Credit) | 2018 R’ Debit/(Credit) | |
Retained earnings | (1 489 440) | (1 388 000) | |
Ordinary Share Capital | 2 | (3 480 000) | (1 920 000) |
Debentures | 3 | ? | ? |
Motor vehicles – Carrying amount | 5 | 1560 000 | 1 240 000 |
Equipment – Carrying amount | 4 | 344 000 | 602 000 |
Inventory | 144 300 | 132 800 | |
Trade Receivables | 145 800 | 188 600 | |
Bank | ? | ? | |
Trade and other payables | (254 000) | (232 900) | |
SARS (payable)/receivable | 6 400 | (9 800) |
Additional information:
- The following information, among others, was obtained from the statement of comprehensive income:
2019 R’ | 2018 R’ | |
Profit on disposal of vehicles | 9 000 | 0 |
Other operating expenses | (783 650) | (701 851) |
Finance costs | ? | ? |
Profit before tax for the year | 770 240 | 688 900 |
Operating expenses include depreciation of R279 249 (2018: R224 586), impairment loss on motor vehicles of R143 000 (2018: R0) and fines of R32 000 (2018: R18 000).
- On 5 September 2018 AT had a capitalisation issue of 1 share for every 4 held at R8 per share. 80 000 additional shares were issued to the public on 1 February 2019. Share issue costs amounted to R12 000. A total of 320 000 shares were issued as at 30 June 2019. Management elected to write off share issue costs against retained earnings. A dividend was declared on 28 June 2019.
- 5 000 12% Debentures were issued on 1 July 2017 at a premium of 8%. The debentures have a par value of R200 each and are redeemable at par value on 30 June 202 Coupon payments are made on 30 June annually in cash.
Finance costs for the year relate only to debentures.
- Equipment is depreciated at 20% per annum on the straight-line method, with no residual value. All the equipment was purchased on 1 January 2017. Some equipment was sold on 30 June 2019. There were no other additions or disposals to equipment since 1 January 2017.
- Motor vehicles are depreciated on the straight-line basis over a useful life of 4 years, with a 20% of cost residual value. One of the vehicles which was originally purchased on 1 April 2018 at a cost of R320 000 was impaired on 26 June 2019. There were no disposals of motor vehicles in 2019.
- All amounts included in the trial balance for 2018 and 2019 are final and correct.
- Dividends and interest received and paid are classified as operating activities.
- The corporate tax rate for the year is 28% and the dividends withholding tax rate is 20%.
QUESTION REQUIRED
You are required to: Marks | |
Present only the following sections of the Statement of Cash Flows of A&T (Pty) Ltd for the year ended 30 June 2019 on the indirect method:
Comparative figures (2018) are not required. Show all calculations clearly Round all amounts to the nearest rand Round all percentages to 4 decimal points Presentation marks | 28 10 2 |
International Business and the New Realities
ISBN: 978-0136090984
2nd Edition
Authors: S. Tamer Cavusgil, Gary Knight, John R. Riesenberger