QUESTION 1 Below are the statements of Financial Position for Grace Ltd as at 31

Question

QUESTION 1 Below are the statements of Financial Position for Grace Ltd as at 31 December, 2008 and the Statement of Profit year ended 31 December, 2009. or Loss and Other Comprehensive Income for the 2009 GHS 000 2008 ASSETS Non-current assets Tangible assets Intangible assets GHS'000 832 1,415 2.247 681 817 1,498 Current assets Inventory Receivables Investments Cash 619 584 396 17 1,616 3,863 701 492 125 81 1.399 Total assets 2,897 EQUITY AND LIABILITIES Equity Equity shares (GHS1) Revaluation surplus Retained earnings 500 150 1,924 2,574 300 40 1494 1,834 Non-current liabilities Provision for court case 5% Debentures 50 73 220 293 138 Current liabilities Interest payable Bank Dividends payable Tax payable Trade payables 30 100 60 81 238 517 996 3,863 140 226 529 925 2,897 Total equity and liabilities

Explanation / Answer

Grace Ltd Cash Flow Statement For the year Ended 31 Dec,2009 GHS in "000" Net Income 402 Add: Dividend Paid 81 483 Add: Income Tax Paid 240 EBIT 723 Add: Amortization of Deffered Development expenditure 43 Add: Interest 110 Add: Loss on sale of Intangible assets 6 Operating Profit before working capital changes 882 Working Capital Adjustements Less: Increase in Accounts Receivables -92 Add: Decrease in Inventory 82 Less: Increase in Current Investment -239 Add: Increase in Interest Payables 70 Less: Decrease in Dividend Payable -59 Less: Decrease in Accounts Payables -12 Add: Increase in Tax Payables 12 Cash Generated from Operations 644 Less: Income Tax Paid -240 Net Cash Flows from Operating Activities A 404 Less: Purchase of Tangible Assets -200 Less: Purchase of Intangible Assets -701 Add: Sale of Intangible Assets 103 Net Cash Flows from Investment Activities B -798 Add: Issue of Equity shares 200 Add: Increase in provision for court cases 23 Add: Issue of Debentures 132 Add: Increase in Revaluation Reserve 110 Add: Retained earnings used for Bonus issue 28 Less: Dividend Paid -81 Less: Interest Paid -110 Net Cash Flows from Financing Activities C 302 Net Cash Flows (A+B+C) -92 Add: Opening Balance of Cash 81 Closing Balance of Cash -11 Notes: 1.) Closing balance of retained Earnings 1,924 Less: Opening balance of Retained Earnings -1,494 430 Less: Profit for current year 402 Assumed this is used for Bonus issue 28 2.) Closing balance of Intangible Assets 1,415 Less: Opening balance -817 Change in Value of Intangible Assets 598 Add: Sale of Intangible Assets 103 701 It is assumed that the amount of 1415 is after amortized deferred development expenditureof GHS 43,000 3.) Closing balance of Cash 17 Add: Treasury Bill considered as Cash & Cash Equivalent 32 Less: Closing balance of Bank Overdraft -60 Net closing balance of Cash -11 4.) Closing value of Investment 396 Less: Treasury Bills -32 364 Less: Opening value of Investment -125 Purchase of Current Investment 239

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