Accounting Business Reporting for Decision Making

CHAPTER 7 Statement of cash flows 315

Sales for 2017 were $180 000, and profit after tax was $16 350. Cost of sales was $136 456.

Dividends of $6000 were declared and paid during the year. Interest earned and received was

$2340, and interest incurred and paid was $1654. Tax expense for the period was $3000 and this

was paid in the period. Other expenses (including depreciation) were $24 880. Property, plant and

equipment were purchased for cash.

Required

Prepare a statement of cash flows for Chartowers Ltd for 2017.

7.41 Preparing a reconciliation of cash flow    LO3

Prepare a reconciliation of cash flows from operating activities and profit after tax for Chartowers

Ltd from problem 7.40.

7.42 Evaluating a statement of cash flows    LO4

Refer to problems 7.40 and 7.41 and complete an evaluation of the statement of cash flows of

Chartowers Ltd.

7.43 Preparing a statement of cash flows    LO3

Financial statements of Beef and Wine Ltd are presented below.

Beef and Wine Ltd

Statement of profit or loss for the year ended 31 December 2017

$’000 $’000

Sales

Cost of sales

Opening inventory

+ Inventory purchases

16

147

272

− Closing inventory

163

20 143

Gross profit 129

Expenses

Wages and salaries

Interest expense

Depreciation expense

Other expenses

16

7

8

9 40

Interest received

89

1

Profit before tax

Ta x

90

26

Profit after tax

Retained earnings 31 December 2016

64

13

Dividends paid

75

21

Retained earnings 31 December 2017 54

Beef and Wine Ltd

Balance sheet as at 31 December 2016 and 2017

2017

$’000

2016

$’000

Current assets

Cash at bank

Accounts receivable

Inventory

Prepaid expenses

11

50

20

9

2

56

16

11

90 85

(continued)