Question 3 Preparation and Presentation of the Cash Flow Sta

Question 3: Preparation and Presentation of the Cash Flow Statement You are employed as the accounts executive for Mixed Radar Limited. Your superior has gone on vacation and requires you to prepare some financial statements. The abbreviated balance sheet of Mixed Radar Limited as at December 31, 2021 and December 3, 2022 are illustrated below 2021 2022 Non-Current Assets Plant and E t (at Cost) $760,000.0 920,000.0 Less; Accumulated ation $288,000 318,000.0 $472,000.0 $186,000.0 $658,000.0 $602,000.0 $214,000.0 S816,000.,0 Plant and Equi (at Net) Total Non-Current As urrent Assets S397,000.0 392,000.0 rade Reccivables ash and Cash E Total Current Assets S596,000.0 $332,000.0 $5,000.0 933,000.0 S0.0 789,000.00 Total Assets 91,000.0 1605,000 00 Liabilities and Owners\' Equity Liabilities Non-Current Liabilities $400,000.0 $400,000.0 $100,000. $100,000.0 Total No-Current Liabilities urrent Liabilities Trade crued Ex Income Tax Payable $478,000.0 $64,000.0 $87,000.0 $72,000.0 $96,000.0 verdraft Total Current Liabilities Total Liabilities S629,000.0 029,000.0 $686,000.0 Owners\' Equit id-Up Ca Reserves Retained Earnin Total Owners\' Equity S350,000.0 $75,000.0 S137,000.0 $562,000.0 S500,000,0 S125,000.0 $294,000.0 919,000.0 Total Liabilities and Shareholders 1,591,000.0 1,605,000.

Solution

Net Income calculation Change in retained earnings $     157,000.00 (294000-137000) Add: Dividend Paid $25,000 Net Income $182,000 Cash Flow Statement(Indirect Method) Cash flow from operating activities: Net Income $182,000 Adjustments for: Depreciation                  64,000 Impairment loss                  20,000 Gain on sale of equipment               (16,000) Increase in trade receivables               (60,000) Decrease in inventory               199,000 Decrease in trade payables               (82,000) Accrued expenses                    8,000 Income tax payable                    9,000 overdraft                  22,000 Dividend received               (17,000)                   147,000 Cash flow generated from operations                   329,000 Cash flows from investing activities: Sale of equipment                  54,000 Dividend received                  17,000 Purchase of equipment             (232,000) (920000+72000-760000) Purchase of investment               (48,000) (214000+20000-186000) Cash flow used in investments                 (209,000) Cash flows from financing activities: Debentures redemption             (375,000) (400000-100000) x 125% Issue of share capital               275,000 (150000+50000+75000) Dividend payment -25000 Cash flow used in financing                 (125,000) Decrease in cash and equivalents                      (5,000) Beginning balance 5000 Ending balance                               -   2021 2022 Increase/ Assets (Decrease) Non-Current Assets Property, Plant and Equipment (at Cost) $ 760,000.00 $ 920,000.00 Less: Accumulated Depreciation $ 288,000.00 $ 318,000.00 Property, Plant and Equipment (at Net) $    472,000.00 $    602,000.00 $ 130,000.00 Investments $    186,000.00 $    214,000.00 $    28,000.00 Total Non-Current Assets $    658,000.00 $    816,000.00 $ 158,000.00 Current Assets Inventory $    596,000.00 $    397,000.00 $ (199,000.00) Trade Receivables $    332,000.00 $    392,000.00 $    60,000.00 Cash and Cash Equivalents $        5,000.00 $                  -   $     (5,000.00) Total Current Assets $    933,000.00 $    789,000.00 $ (144,000.00) Total Assets $ 1,591,000.00 $ 1,605,000.00 $    14,000.00 Liabilities and Owners\' Equity Liabilities Non-Current Liabilities 12% Debentures $    400,000.00 $    100,000.00 $ (300,000.00) Total Non-Current Liabilities $    400,000.00 $    100,000.00 $ (300,000.00) Current Liabilities Trade Payables $    478,000.00 $    396,000.00 $   (82,000.00) Accrued Expenses $      64,000.00 $      72,000.00 $      8,000.00 Income Tax Payable $      87,000.00 $      96,000.00 $      9,000.00 Overdraft $                  -   $      22,000.00 $    22,000.00 Total Current Liabilities $    629,000.00 $    586,000.00 $   (43,000.00) Total Liabilities $ 1,029,000.00 $    686,000.00 $ (343,000.00) Owners\' Equits Paid-Up Capital $    350,000.00 $    500,000.00 $ 150,000.00 Reserves $      75,000.00 $    125,000.00 $    50,000.00 Retained Earnings $    137,000.00 $    294,000.00 $ 157,000.00 Total Owners\' Equity $    562,000.00 $    919,000.00 $ 357,000.00 Total Liabilities and Shareholders\' Equity $ 1,591,000.00 $ 1,605,000.00 $    14,000.00