Which of the following alternatives represents the correct amount that must be disclosed as cash receipts from customers in the cash generated from operations section according to direct method in the statement cash flows of Honey Limited for the year ended 30 September 2022?   1. 686 000 2. 796 400 3. 606 000 4. 750 000 5. 850 200

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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he information below relates to questions 1 – 16.

The following information pertains to Honey Limited.

Extract from ledger account balances as at 30 September:

 

  2022 2021
  R R
Share capital: Ordinary shares 380 500 338 300
Share capital: Preference shares 291 000 264 700
Retained earnings 66 200 48 400
Long-term loan - ABC Bank 88 000 120 000
Land and buildings at cost 623 000 401 000
Machinery and equipment at carrying amount 262 300 222 700
Inventory 83 500 73 000
Trade receivables control 92 700 83 300
Listed investments 110 000 0
Bank 25 200 46 300
Trade payables control 66 500 52 600
SARS (income tax) 63 400 48 700
Dividends payable 46 200 62 000
Dividends receivable 0 0
Accrued expenses (wages) 0 11 400
Prepaid expenses 11 200 4 200
Revenue 805 800  
Cost of sales 392 400  
Administrative, distribution and other expenses 160 200  
Fair value gain on listed investments 8 600  
Dividends income 20 800  
Loss on sale of machinery and equipment 10 100  
Income tax expense 55 200  
Depreciation 15 500  
Wages 84 400  
Insurance expense 14 100  

 


 

2.    Additional information

2.1   The following pertains to property, plant and equipment:

During the year machinery and equipment with a carrying amount of R95 000 was sold for cash. This transaction has been correctly recorded. 

Land and buildings with a cost price of R110 000 were sold for cash at the same amount. Land and buildings are not depreciated.

All purchases of property, plant and equipment pertained to replacements and were paid in full.

2.2   On 29 September 2022 Honey Limited declared ordinary shares dividend of 50 cents per share whilst the preference shares dividends amounted to R40 800. 

2.3   The interest expense paid on the long-term loan amounted to R16 800 and is not yet recorded. 

2.4   On 31 August 2022, when the total number of ordinary shares issued were 120 000 shares, the shareholders approved the capitalisation issue of one (1) ordinary share for every four (4) ordinary shares held. The capitalisation issue was done from retained earnings at R0,50 per share. All other issued shares were paid for in cash.

 

 

 

QUESTION 1

Which of the following alternatives represents the correct amount that must be disclosed as cash receipts from customers in the cash generated from operations section according to direct method in the statement cash flows of Honey Limited for the year ended 30 September 2022?


 

1.
686 000
2.
796 400
3.
606 000
4.
750 000
5.
850 200
 
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Which of the following alternatives represents the correct amount that must be disclosed as proceeds from issue of shares in the financing activities section in the statement cash flows of Honey Limited for the year ended 30 September 2022?

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