Kamulinda Company Limited (KCL) has provided the following financial information that relates to the year ended 31 December 2020: Statement of profit or loss Sales revenue Cost of sales Gross profit Administrative costs Distribution costs Operating profit Interest received Shs '000' Assets: Non-current assets Accumulated depreciation Netbook value Investments Current assets: Inventory 250,400 (87,900) 162,500 (35,000) (50,000) 77,500 45,000 Shs '000' Interest paid Profit before tax Taxation Profit after tax Statement of position as at 31 December: 2020 2019 Shs '000' Shs '000' (25,000) 97,500 (20,000) 77,500 459,000 (125,000) 334,000 76,000 156,000 Find current assets continued- 246,000 (89,000) 157,000 100,000 Accounts receivable Cash at hand Cash at bank Total assets Equity and liabilities: Share capital Share premium Retained earnings Revaluation Non-current liabilities: Long term loan Current liabilities: Accounts payable Interest payable Tax Bank overdraft 24,450 65,000 655,450 200,000 85,000 117,500 61,000 80,000 36,450 18,500 32,000 25,000 655,450 68,000 40,000 35,000 400,000 150,000 52,000 40,000 36,000 45,000 47,000 30,000 400,000 Additional information: On 31 July 2020, a non-current asset that had cost Shs 35,000,000 was disposed of for Shs 24,500,000. The asset had accumulated depreciation Shs 15,000,000. Required: Prepare KCL's statement of cash flows for the year ended 31 December 2020, using the indirect method in accordance with the relevant financial reporting standard. show all the necessary workings
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.
Step by step
Solved in 3 steps with 3 images
