Road Runner buys and sells brand name running shoes from a small shop in Limpopo. The...

 

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Road Runner buys and sells brand name running shoes from a small shop in Limpopo. The company started trading on 1 January 2021. The following transactions took place during January 2021: 1. On 1 January 2021, Road Runner obtained a loan of R500 000, at an interest rate of 12% per annum, from Invest Bank as start-up capital to fund the initial operations. Interest is payable monthly in arrears on the 1st day of the next month. 2. Road Runner purchased a delivery vehicle for R196 000 cash on 1 January 2021. According to Road Runner's accounting policy, all vehicles are depreciated on the straight line basis over their estimated useful lives. According to estimates, Road Runner will be able to sell the delivery vehicle for R40 000 at the end of its estimated useful life of 5 years. 3. At the beginning of January 2021, Road Runner purchased 400 pairs of running shoes from various suppliers on credit for R150 per pair. At the end of January 2021 there were still 100 pairs of running shoes on hand and Road Runner had paid 75% of their outstanding accounts at suppliers for running shoes purchased during January 2021. REQUIRED MARKS Explain in your own words how the statement of cash flows would be impacted by transaction 1 to 3 above, for the MONTH ended 31 January 2021 (assume the INDIRECT method was used). Your discussion should be supported by amounts and calculations where necessary. [14] Effective and efficient communication [1] Road Runner buys and sells brand name running shoes from a small shop in Limpopo. The company started trading on 1 January 2021. The following transactions took place during January 2021: 1. On 1 January 2021, Road Runner obtained a loan of R500 000, at an interest rate of 12% per annum, from Invest Bank as start-up capital to fund the initial operations. Interest is payable monthly in arrears on the 1st day of the next month. 2. Road Runner purchased a delivery vehicle for R196 000 cash on 1 January 2021. According to Road Runner's accounting policy, all vehicles are depreciated on the straight line basis over their estimated useful lives. According to estimates, Road Runner will be able to sell the delivery vehicle for R40 000 at the end of its estimated useful life of 5 years. 3. At the beginning of January 2021, Road Runner purchased 400 pairs of running shoes from various suppliers on credit for R150 per pair. At the end of January 2021 there were still 100 pairs of running shoes on hand and Road Runner had paid 75% of their outstanding accounts at suppliers for running shoes purchased during January 2021. REQUIRED MARKS Explain in your own words how the statement of cash flows would be impacted by transaction 1 to 3 above, for the MONTH ended 31 January 2021 (assume the INDIRECT method was used). Your discussion should be supported by amounts and calculations where necessary. [14] Effective and efficient communication [1]

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The statement of cash flow usually shows the cash inflow into the business and out of the business 1... View the full answer