Accounting Business Reporting for Decision Making

312 Accounting: Business Reporting for Decision Making

7.33   LO1

Outline how a creditor, investor and employee would interpret the statement of cash flows of

Coconut Plantations Pty Ltd.

Coconut Plantations Pty Ltd

Statement of cash flows

$

4 months

2016

$

12 months

2017

Cash flows from operating activities

Receipts from customers

Receipts from other income

Payments to suppliers and employees

Payment of interest

Payment of income tax

476 890

5 000

• 396 500
  
  
  • 5 000
    0
  
  
  
  

1 480 100

1 000

• 1 251 500
  
  
  • 14 000
  
  
  • 45 000
    Net cash inflows from operating activities 80 390 170 600
    Cash flows from investing activities
    Payment for equipment –40 000 –160 000
    Net cash outflows from investing activities –40 000 –160 000
    Cash inflows from financing activities
    Proceeds from borrowings
    Repayment of borrowings
    Dividend paid to shareholder
  
  
  
  

20 000

0

0

140 000

• 29 000


• 14 790
  Net cash inflows from financing activities 20 000 96 210
  Net cash inflows during the period
  Cash at the beginning of the period

60 390

0

106 810

60 390

Cash at the end of the period 60 390 167 200

7.34   LO2

Refer to the data on Coconut Plantations Pty Ltd in exercise 7.33 and answer the following questions.

a. Coconut Plantations Pty Ltd’s profit after income tax for 4 months to 31 December 2016 was

$105 000 and for the 12 months to 31 December 2017 was $229 600. This is higher than net

cash flows from operations. Is this normal? Why?

b. The net cash flows from investing activities are negative in both periods. Is this normal? Why?

c. What do you see as the most important cash activity for an entity? Why?

Problems

 BASIC |   MODERATE |    CHALLENGING

7.35 Preparing a statement of cash flows  LO3

Presented below is information for Jill Winter, a sole trader, for the year ended 31 December 2017.

Use the information to prepare a statement of cash flows.

Cash balance, 31 December 2017

Cash paid to employees and suppliers

Cash received from sale of land

Cash paid as GST

Cash received from money market borrowings

Depreciation expense for the period

Cash paid to purchase equipment

Cash balance, 1 January 2017

Cash paid as drawings

Cash received from customers

Cash received as interest

Cash paid for interest

$ 68 340

291 300

50 420

22 400

33 600

13 440

56 000

51 540

70 580

369 700

8 960

5 600