Eagle Ltd. is a public company with an authorised share capital of 4 000 000 ordinary shares. 500 000 of these shares were issued at R5 each on 1 March 2020.

They appointed you to help the other financial staff member compiling the financial statements. The other staff member finished the Statement of Comprehensive Income and the Statement of Financial Position on 28 February 2021.

INSTRUCTION:

Use the information to assist him in completing the following:

1. Note to Cash flow generated from operations. (14)

2. Cash Flow Statement for the year ended 28 February 2021.

              Show all relevant calculations in the area provided.           (28)

3 .By referring to the Cash Flow Statement of Eagle Ltd., name TWO aspects which had a drastic negative effect on the cash flow situation of the company. Refer to the figures.      (4)

 INFORMATION:

1. Extract from the Statement of Comprehensive Income for the year ended 28 February 2021:

Depreciation	25 000
Interest expense	22 500
Profit before tax	196 000
Income tax	?
Profit after tax	137 200

2. Information from the Statement of Financial Position op 28 February:

	2021	2020
Fixed assets at carrying value	2 770 000	2 750 000
Fixed deposit	100 000	120 000
Inventory	58 800	68 400
Trade and other receivables	47 950	44 500
Cash and cash equivalents	7 500	6 650
Ordinary share capital	2 368 000	2 500 000
Retained income	66 250	93 850
Mortgage	450 000	300 000
Trade and other payables:	100 000	115 400
Creditors control	26 100	64 400
SARS (Income tax)	19 700	29 000
Shareholders for dividends	47 000	22 000
Bank (overdraft)	7 200	0

3. Additional information:
   1. An additional 20 000 ordinary shares were issued on 1 June 2020 and 50 000 ordinary shares were bought back at R5,50 per share on 1 December 2020.

1. 
   
   2. An interim dividend of 12 cents per share were paid on 1 August 2020. A final dividend of 10 cents per share were declared on 28 February 2021.

[46]

 

ANSWER SHEET: CASH FLOW STATEMENT (46 marks)

1.         Note to Cash generated from Operations:

Reconciliation between profit before tax and cash generated from operations

(14)

Calculations (Question 2):

 

2.           Cash Flow Statement for the year ended 28 February 2021. Show all relevant calculations in the area provided.

 

CASH FLOW FROM ________________________________
Cash flow generated from operations
Interest paid
Dividends paid
Income tax paid
CASH FLOW FROM ________________________________
Purchases of fixed assets	(50 000)
Proceeds from asset disposal	5 000
Movement in Fixed deposit
CASH FLOW FROM ________________________________
Proceeds from share issued
Buy back of shares
Movement in loan
NET CHANGE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS: OPENING BALANCE
CASH AND CASH EQUIVALENTS: CLOSING BALANCE

(28)

3.Answer the following questions:

3.	By referring to the Cash Flow Statement of Eagle Ltd, name TWO aspect s which had a drastic negative effect on the cash flow situation of the company.
	Refer to the figures.
		(4)

(46)

Answer rating: 100% (QA)

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