Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd Logo
Upload

Welcome to Scribd!

  • 5 views

    4QQMN501 - Comprehending The Statement of Cash Flows

    Uploaded by

    londontower2001

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    4QQMN501 - Comprehending The Statement of Cash Flows

    Uploaded by

    londontower2001
    5 views3 pages

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    5 views3 pages

    4QQMN501 - Comprehending The Statement of Cash Flows

    Uploaded by

    londontower2001

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    4QQMN501 - Introduction to Financial Reporting

    Comprehending The Statement of Cash Flows

    Suggested Reading
    (Please use the following reading to answer the tutorial questions)

    Chapter 6 of Atrill, P. and McLaney, E. (2019) Introduction to Financial Reporting. Ninth Edition.
    Custom publication for King’s College London). Compiled by McFaull, A. Harlow: Pearson.

    Tutorial questions
    (Please write a short answer in your own words to each of the following questions, written in a way
    to help you when you come back to revise this topic for the exam)

    Tutorial questions

    1) Based upon the information provided on the next two pages, please create a statement of cash flows for
    Kingsla Motors for the period ending the 31st of December 2019.

    During 2019, Kingsla Motors Ltd sold £200,000,000 worth of property. There was no other acquisitions or
    disposal of non current assets for this business. A dividend to ordinary shares was paid of £0. The interest
    payable expense for the year was is fully paid up in cash at £63,500,000.

    2) In break out groups, discuss the performance of Kingsla Motors Ltd? What observations might you make
    about the business had the recall of the model KCL not happened?

    3) Looking at the operating section of the cash flow statement you’ve drawn up, what strategy did Kingsla
    Motors Ltd’s management take to increase its cash and cash equivalents?

    4) Looking at the investing section of the cash flow statement you’ve drawn up, what strategy did Kingsla
    Motors Ltd’s management take to increase its cash and cash equivalents?

    5) Looking at the financing section of the cash flow statement you’ve drawn up, what strategy did Kingsla
    Motors Ltd’S management take to increase its cash and cash equivalents?
    4QQMN501 - Introduction to Financial Reporting
    Comprehending The Statement of Cash Flows

    King’s Motors Ltd


    Income Statement for period ending 31st of December 2019

    2019

    Revenue 883,000,000

    Cost of sales (300,000,000)

    Gross profit 583,000,000

    Depreciation on equipment (100,000,000)

    Depreciation on fixture and fittings (25,000,000)

    Advertising costs (27,500,000)

    Staff Wages (20,000,000)

    (172,500,000)

    Operating profit 410,500,000

    Interest receivables 0

    Interest payables (63,500,000)

    Extraordinary loss - car recall* (900,000,000)

    Provision for further car recalls* (67,000,000)

    Loss before taxation (620,000,000)

    Taxation 0

    Loss for the year (620,000,000)

    Notes Section

    *A fault was identified in Kingsla Motor leading car the Model KCL. During the financial year ending 2019, this has so far cost
    Kingsla Motors £900,000,000 a further £67,000,000 expected repairing the remaining to rectify the fault, for which a provision
    has been set aside.

    During 2019, Kingsla Motors Ltd sold £200,000,000 worth of property. There was no other acquisitions or disposal of non
    current assets for this business. A dividend to ordinary shares was paid of £0. The interest payable expense for the year was is
    fully paid up in cash at £63,500,000.
    4QQMN501 - Introduction to Financial Reporting
    Comprehending The Statement of Cash Flows

    King’s Motors Ltd


    Balance Sheets as at the 31st of December 2018 and 2019

    2018 2019

    £ £

    Non-Current Assets

    Production Machinery 1,000,000,000 1,000,000,000

    Property 400,000,000 200,000,000

    Equipment 270,000,000 170,000,000

    Tools and Equipment 40,000,000 40,000,000

    Fixture and Fittings 250,000,000 225,000,000

    1,960,000,000 1,635,000,000

    Current Assets

    Cash and Cash Equivalents 25,000,000 132,000,000

    Inventories (stock) 40,000,000 20,000,000

    Trade Receivables 503,350,000 200,000,000

    568,350,000 352,000,000

    2,528,350,000 1,987,000,000

    Non-Current Liabilities

    Bank loan 100,000,000 200,000,000

    100,000,000 200,000,000

    Current Liabilities

    Trade Payables 25,000,000 40,000,000

    Provision for further car recalls 0 67,000,000

    Taxation 263,350,000 0

    288,350,000 107,000,000

    Ownership Equity

    Share Capital (£1 shares) 1,000,000,000 1,100,000,000

    Share Premium Account 500,000,000 560,000,000

    Retained Earnings 620,000,000 0

    Asset Re-valuation 20,000,000 20,000,000

    2,140,000,000 1,680,000,000

    2,528,350,000 1,987,000,000

    You might also like