You are provided the following financial information for Darkside Constructions, a company specialising in the production of moon-sized Imperial battle stations:
DARKSIDE CONTRUCTIONS
COMPARATIVE BALANCE SHEETS
AS AT 30th JUNE
| 2015 | 2014 | |||
| $’000’s | $’000’s | |||
| Current Assets | ||||
| Cash on Hand | 35 | 12 | ||
| Cash at Bank | 209 | 98 | ||
| Accounts Receivable (net) | 58 | 54 | ||
| Inventory | 310 | 330 | ||
| Prepaid Expenses | 35 | 647 | 33 | 527 |
| Non-Current Assets | ||||
| Planet destroying Laser | 840 | 760 | ||
| less Acc. Depreciation | 440 | 400 | 408 | 352 |
| Buildings | 80 | 180 | ||
| Total Assets | 1 127 | 1 059 | ||
| Current Liabilities | ||||
| Bank Overdraft | 20 | – | ||
| Accounts Payable | 64 | 80 | ||
| Accrued Stormtroopers wages | 63 | 89 | ||
| Loan | 12 | 159 | – | 169 |
| Non-Current Liabilities | ||||
| Loan | 18 | – | ||
| Total Liabilities | 177 | 169 | ||
| Net Assets | 950 | 890 | ||
| Equity | ||||
| D. Vader, Capital | 950 | 890 | ||
(continued over page)
DARKSIDE CONSTRUCTIONS
INCOME STATEMENT
FOR THE YEAR ENDED 30th JUNE 2015
| $’000’s | |||||
| Net Sales | 1 990 | ||||
| COS | 1 300 | ||||
| Less: Discount received | 5 | 1 295 | |||
| Gross Profit: | 695 | ||||
| Other Revenue: | |||||
| Gain on sale of building | 60 | ||||
| Interest received | 8 | ||||
| 763 | |||||
| Expenses: | |||||
| Selling & Admin Expense | 517 | ||||
| Doubtful Debts Expense | 9 | ||||
| Interest Expense | 12 | 538 | |||
| Profit | 225 | ||||
Additional Information:
- Selling & Admin Expense includes depreciation expense of $32,000.
- The owner, D. Vader, contributed $20,000 during the year
- A new planet destroying laser was purchased by extending the loan, and paying the balance in cash
- A building which had originally cost $100,000 was sold for $160,000 cash, making the business a gain of $60,000
REQUIRED:
Answer this question on the pro forma provided
- Using the template provided below, prepare a statement of cash flows. Show all calculations on the pro forma. [12 marks]
- The owner of Darkside Constructions can’t understand why the cash flow from operations is so different to the profit figure. As he has a tendency to react quite badly to negative news, carefully explain to Mr Vader at least two of the factors causing this difference. [2 marks]
- Explain what information is provided by a Statement of Cash Flow that is not provided by the other General Purpose Financial Reports (Income Statement, Statement of Changes in Equity & Balance Sheet)? [2 marks]
DARKSIDE CONSTRUCTIONS
Cash Flow Statement
FOR THE YEAR ENDED 30th JUNE 2015
| $’000 | $’000 | ||
| Cash Flows from Operating Activities | |||
| Receipts from customers | |||
| Payments to suppliers & employees | |||
| Cash generated by operations | |||
| Interest received | |||
| Interest paid | |||
| Cash Flows from Investing Activities | |||
| Proceeds from sale of buildings | |||
| Payment for Laser | |||
| Cash Flows from Financing Activities | |||
| Contribution by owner | |||
| Drawings | |||
| Net increase / decrease in cash held | |||
| Cash at the beginning of the year | |||
| Cash at the end of the year |
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