he following Statement of Financial Position is related to Jeff Berhad.   Additional information: (1) During the year, depreciation for machinery is RM22,750. Machinery with a net value of RM2,760 was disposed at a profit of RM2,000. (2) Depreciation for office equipment during the year is RM5,520. Office equipment with cost of RM24,300 was sold for RM18,780. Loss on disposal of office equipment is RM2,760. (3) The net profit before tax is RM41,770. Tax charge for the year is RM17,250. (4) The cash dividends declared were RM26,910. In addition, the company received cash from issuance of share capital and debenture during the year. Required: (a) Based on the above information, prepare the Statement of Cash Flows for the year ended 31 December 2020 for Jeff Berhad using the indirect method.  (b) Based on your understanding, discuss which method is the better way to present the Statement of Cash Flows: Direct Method or Indirect Method?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The following Statement of Financial Position is related to Jeff Berhad.

 

Additional information:

(1) During the year, depreciation for machinery is RM22,750. Machinery with a net value of RM2,760 was disposed at a profit of RM2,000.

(2) Depreciation for office equipment during the year is RM5,520. Office equipment with cost of RM24,300 was sold for RM18,780. Loss on disposal of office equipment is RM2,760.

(3) The net profit before tax is RM41,770. Tax charge for the year is RM17,250.

(4) The cash dividends declared were RM26,910. In addition, the company received cash from issuance of share capital and debenture during the year.

Required:

(a) Based on the above information, prepare the Statement of Cash Flows for the year ended 31 December 2020 for Jeff Berhad using the indirect method. 

(b) Based on your understanding, discuss which method is the better way to present the Statement of Cash Flows: Direct Method or Indirect Method? 

Jeff Berhad
Statement of Financial Position
31.12.2020
31.12.2019
Non-Current Assets
RM
RM
Machinery (at cost)
Accumulated depreciation - machinery
Office equipment (at cost)
Accumulated depreciation - office equipment
387,780
300,000
(74,520)
40,020
(62,100)
50,520
(20,700)
(17,940)
Current Assets
Inventories
70,000
61,100
104,880
51,060
59,064
97,483
Trade receivables
Cash in bank
Total Assets
568,560
478,087
Shareholders' Equity
Ordinary share capital
Retained earnings
329,500
301,900
79,670
77,280
Liabilities
Bank overdraft
Nil
Trade payables
Dividend payable
Тах раyable
19,320
50,977
14,980
11,240
73,140
24,840
13,800
5% debenture
50,000
Nil
Total Shareholders' Equity and Liabilities
568,560
478,087
Transcribed Image Text:Jeff Berhad Statement of Financial Position 31.12.2020 31.12.2019 Non-Current Assets RM RM Machinery (at cost) Accumulated depreciation - machinery Office equipment (at cost) Accumulated depreciation - office equipment 387,780 300,000 (74,520) 40,020 (62,100) 50,520 (20,700) (17,940) Current Assets Inventories 70,000 61,100 104,880 51,060 59,064 97,483 Trade receivables Cash in bank Total Assets 568,560 478,087 Shareholders' Equity Ordinary share capital Retained earnings 329,500 301,900 79,670 77,280 Liabilities Bank overdraft Nil Trade payables Dividend payable Тах раyable 19,320 50,977 14,980 11,240 73,140 24,840 13,800 5% debenture 50,000 Nil Total Shareholders' Equity and Liabilities 568,560 478,087
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