REQUIRED Use the information provided below to prepare the Cash Flow Statement for the year ended 30 June 2020. INFORMATION The information given below was extracted from the books of Siyakha Limited for the financial year ended 30 June 2020. 1. STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE: 2020 R 2019 R ASSETS Property, plant and equipment (See note to the financial statements below.) 14 826 000 13 998 000 Inventory 1 539 000 1 638 000 Accounts receivable 6 243 000 4 572 000 Bank 861 000 480 000 23 469 000 20 688 000 EQUITY AND LIABILITIES Ordinary Share Capital 9 300 000 8 220 000 Retained Income 2 031 000 1 701 000 Loan: OVS Bank 8 100 000 5 940 000 Accounts payable 3 795 000 3 549 000 Company tax payable 150 000 564 000 Dividends payable 93 000 714 000 23 469 000 20 688 000 2. STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2020 R Depreciation on Vehicles 1 233 000 Depreciation on Equipment 1 083 000 Operating profit 3 801 000 Interest on Loan 1 404 000 Profit before tax 2 397 000 Profit after tax 1 236 000 3. STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2020 Ordinary Share Dividends for the year R906 000 4. NOTE TO THE FINANCIAL STATEMENTS AS AT 30 JUNE: Property, plant and equipment 2020 2019 R R Vehicles (Cost) 7 350 000 8 340 000 Accumulated Depreciation on Vehicles 2 508 000 1 443 000 Equipment (Cost) 15 906 000 11 940 000 Accumulated Depreciation on Equipment 5 922 000 4 839 000 vmc Note:
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
REQUIRED
Use the information provided below to prepare the Cash Flow Statement for the year ended 30 June 2020.
INFORMATION
The information given below was extracted from the books of Siyakha Limited for the financial year ended
30 June 2020.
1.
2020
R
2019
R
ASSETS
Property, plant and equipment (See note to the financial statements below.) 14 826 000 13 998 000
Inventory 1 539 000 1 638 000
Accounts receivable 6 243 000 4 572 000
Bank 861 000 480 000
23 469 000 20 688 000
EQUITY AND LIABILITIES
Ordinary Share Capital 9 300 000 8 220 000
Retained Income 2 031 000 1 701 000
Loan: OVS Bank 8 100 000 5 940 000
Accounts payable 3 795 000 3 549 000
Company tax payable 150 000 564 000
Dividends payable 93 000 714 000
23 469 000 20 688 000
2. STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2020
R
Depreciation on Equipment 1 083 000
Operating profit 3 801 000
Interest on Loan 1 404 000
Profit before tax 2 397 000
Profit after tax 1 236 000
3. STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2020
Ordinary Share Dividends for the year R906 000
4. NOTE TO THE FINANCIAL STATEMENTS AS AT 30 JUNE:
Property, plant and equipment 2020 2019
R R
Vehicles (Cost) 7 350 000 8 340 000
Accumulated Depreciation on Vehicles 2 508 000 1 443 000
Equipment (Cost) 15 906 000 11 940 000
Accumulated Depreciation on Equipment 5 922 000 4 839 000
vmc
Note:
■ Some of the vehicles were sold at carrying value during the year, but no new vehicles were bought.
■ Equipment was purchased for cash during the year; no equipment was sold
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