ACCOUNTING 2102AFE Financial Accounting – Topic 10 Weekly Workshop Homework Solution

2102AFE Financial Accounting – Topic 10 Weekly Workshop Homework Solution

2102AFE Financial Accounting
Weekly Workshop Homework Solution
Topic 10 – Statement of Cash Flows II (Chapter 17)
Loftus et al. (2015) Chapter 17 Comprehension Question 2
Loftus et al. (2015) Chapter 17 Case Study 17.1
Practical Question

Waterloo Ltd provided the following Statement s of Financial Position as at 30 June 2015 and 2016:

ASSETS
Cash at Bank
Bank Bills
Accounts Receivable
Inventory
Prepaid Expenses
Equipment
Accumulated Depreciation - Equipment
LIABILITIES
Bills payable
Accounts payable
Accrued expenses
Current tax liability
Debentures
Share capital, fully paid
Retained Earnings

2015
$

2016
$

20,250
10,000
89,000
390,000
40,000
445,000
(84,000)
$910,250

19,150
5,000
99,750
335,000
12,500
290,000
(50,400)
$711,000

26,500
146,400
13,000
15,000
75,000
525,000
109,350
$910,250

16,000
137,500
16,000
13,000
100,000
300,000
128,500
$711,000

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2102AFE Financial Accounting – Topic 10 Weekly Workshop Homework Solution
An inspection of the company’s 2016 income statement and general ledger accounts revealed the
following:
1. Statement of Financial Performance information:
Net sales revenue
Cost of sales
Expenses (not including depreciation, bad debts written
off of $1,000, interest expense of $7,000 and income tax
expense)
Income tax expense

$
1,046,000
679,000
206,550

58,000

2. Depreciation expense amounted to $38,600, and a fully depreciated piece of equipment with a
cost of $5,000 was discarded and its cost and accumulated depreciation removed from the
accounts.
3. New equipment was purchased for cash during the year.
4. Debentures of $25,000 were redeemed for cash.
5. 75,000 ordinary shares were issued for cash during the year at an issue price of $3 per share.
6. Cash dividends of 20c per share were declared and paid on issued shares including those issued
during the year. The shares issued at 30 June 2015 had been issued at $1.
7. The company pays tax in four instalments, and the first three instalments for the current year have
been paid.
8. Bank bills held by Waterloo Ltd can be cashed in with 24 hours’ notice.
9. Waterloo Ltd. classifies any interest paid as an operating activity.
Required:
Prepare a Cash Flow Statement for Waterloo Ltd for the year ended 30 June 2016. It must be
prepared in accordance with AASB 107 Statement of Cash Flows using the pro forma provided.
Show workings.

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