111 etisalat 91% 12:49 PM udmoodle.ud.ac.ae Question 3: Preparation and Presenta

Question

111 etisalat 91% 12:49 PM udmoodle.ud.ac.ae 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 31, 2022 are illustrated below 2021 2022 Assets on-Current Assets Plant and E (at Cost) S760,000.0 S288,000 Less; Accumulated Plant and 18.000 $472,000.0 186,000.0 $658,000.0 at Net $214,000.0 $816,000.0 Total Now-Current Assets urrent Assets S596,000 Trade Receivables ash and Cash Equivalents otal Current Assets $392,000.0 55,000.0 $933,000.0 So $789,000.0 Total Assets 1,591,000.0 Liabilities and Owners'F Liabilities Non-Current Liabilities 400,000.0 400,000.o S100,000.0 $100,000.0 Total Now-Current Liabiliies urrent Liabilities $396,000.0 $72.000.0 96,000.0 522,000.0 Trade Pavables $64,000.o $87,000.0 Tax Payable verdraft wal Current Liabilinies Total Liabilities 629,000.0 1,029,000.0 $686,000.0 wners aid-Up Capital 5350,000.0 $75,000.o $137,000.0 $562,000.0 $125,000.0 $294,000.0 $919,000.0 ned Earni Total Owners' Equity Total Liabilities and Shareholders' 1,591,00 ,605,00

Explanation / Answer

Cash Flow Statement

(For the year ended December 31, 2022)

Cash flow from operations

Net income before tax

$257000

Adjustments for;

Depreciation expense

$64000

Impairment on investments

$20000

Change in inventory

$199000

Change in trade receivables

($60000)

Change in trade payables

($82000)

Change in accrued expenses

$8000

Gain on sale of equipment

($16000)

Cash generated from operations

$390000

Income tax paid

($83000)

Dividend paid

($25000)

Net Cash flow from operations

$282000

Cash flow from investing activities

Sale of equipment

$54000

Purchase of equipment

($232000)

Payment for investments

($48000)

Net cash flow from investing activities

($226000)

Cash flow from investing activities

Sale of 12% debentures

($300000)

Issue of share capital

$200000

Dividend received

$17000

Net cash flow from financing activities

($83000)

Net increase (Decrease) in cash and cash equivalents

($27000)

Cash and cash equivalents as at Jan. 1, 2022

$5000

Cash and cash equivalents as at Dec. 31, 2022

($22000)

Working Note;

1. Net income before tax;

($294000 + $92000 + $25000 – $17000 – $137000) = $257000

2. Income tax paid;

($87000 + $92000 – $96000) = $83000

3. Purchase of equipment;

($920000– $760000 + $72000) = $232000

4. Payment for investments;

($214000 – $186000 – $20000) = $48000

5. Sale of 12% debentures;

($400000 – $100000) = $300000

6. Issue of share capital;

($500000 – $350000) + ($125000 – $75000) = $200000

Cash Flow Statement

(For the year ended December 31, 2022)

Cash flow from operations

Net income before tax

$257000

Adjustments for;

Depreciation expense

$64000

Impairment on investments

$20000

Change in inventory

$199000

Change in trade receivables

($60000)

Change in trade payables

($82000)

Change in accrued expenses

$8000

Gain on sale of equipment

($16000)

Cash generated from operations

$390000

Income tax paid

($83000)

Dividend paid

($25000)

Net Cash flow from operations

$282000

Cash flow from investing activities

Sale of equipment

$54000

Purchase of equipment

($232000)

Payment for investments

($48000)

Net cash flow from investing activities

($226000)

Cash flow from investing activities

Sale of 12% debentures

($300000)

Issue of share capital

$200000

Dividend received

$17000

Net cash flow from financing activities

($83000)

Net increase (Decrease) in cash and cash equivalents

($27000)

Cash and cash equivalents as at Jan. 1, 2022

$5000

Cash and cash equivalents as at Dec. 31, 2022

($22000)

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