You just need to do accounting assignment
PART A:
1. What is the purpose of a statement of cash flows and how might such a statement be used by investors and other users of financial reports?
2. Explain why the cash position for a firmfrom one reporting period to the next may show a marked improvement according to the statement of cash flows but the statement of profit or loss for the same period shows a significant decline in reported profit.
PART B:
Unicorn Ltd, a manufacturing company, commenced operations on 1 July2014by issuing 308200 $5.00 shares, payable in full on application on a first-come, first-served basis. By 15August2014 the shares were fully subscribed and duly allotted.There were no share issue costs.
For theyear ending 30 June 2016, the company recorded the following aggregate transactions:
|
|
$
|
|
Sales
|
5 756 000
|
|
Interest income
|
6 000
|
|
Cost of Sales
|
4287 000
|
|
Sundry income
|
13 000
|
|
Employee benefit expenses - Admin
|
144 000
|
|
Depreciation expense- Admin
|
42 000
|
|
Distribution Expenses
|
86 000
|
|
Insurance expense
|
37 000
|
|
Rental expenses - office
|
23 000
|
|
Sales and marketing
|
820 000
|
|
Doubtful debts expense
|
6 000
|
|
Interest expense
|
44 000
|
|
Other borrowing expenses
|
4 000
|
|
Income tax expense
|
85 000
|
The following additional information was noted during the preparation of financial statements for the year ended 30 June 2016:
(a) There were no share issues during the year ended 30 June 2015.
(b) On 1 July 2015 30 000 fully paid shares were issued for $150 000.
(c)Adividend of $150 000 was declared and paid during the 2016 financial year and a final dividend for 2016 of $101 460 was proposed but not recognised in the financial statements.
(d) The balances of the land revaluation reserve and the investments revaluation reserve at 30 June 2015 were $15 000 credit and $35 000 credit respectively.
(e) The following revaluations were recognised during the year ended 30 June 2016: land revalued upward by $50 000 (related income tax $15 000) by Valuations RUS Pty Ltd and available-for-sale investments were revalued upward by $10 000 (related income tax $3000).
(f) The available-for-sale investments are held as part of a long-term investment strategy.
(g) $40 000 of bank loans is repayable within 1 year.
(h) $110 000 of other loans is repayable within 1 year.
(i) The provision for employee benefits includes $58 000 payable within 1 year.
(j) The warranty provision is in respect of a 12-month warranty given on certain goods sold.
(k) Other expenses included payments to the auditors Auditcheck for audit services of $15 000 and an amount of $3 500 for taxation services.
(l) Unicorn Ltd uses the single statement format for the statement of profit or loss and other comprehensive income and classifies expenses by function within the statement.
(m) Unicorn Ltd measures inventory at the lower of cost and net realizable value and buildings, plant and equipment using the cost model.
Summarised account balances are provided below:
|
Year-end balances, 30 June 2016
|
$
|
|
Cash on hand
|
4 000
|
|
Cash on deposit, at call
|
100 000
|
|
Accounts receivable - trade
|
450 000
|
|
Allowance for doubtful debts/ impairment
|
14 000
|
|
Other debtors
|
93 000
|
|
Raw Materials inventories, 30 June 2016
|
188 000
|
|
Finished goods inventories, 30 June 2016
|
714 000
|
|
Land
|
102 000
|
|
Buildings
|
155 000
|
|
Accumulated depreciation - buildings
|
36 000
|
|
Plant and equipment
|
1 260 000
|
|
Accumulated depreciation - plant and equipment
|
564 000
|
|
Patents
|
48 000
|
|
Accumulated amortisation of patent
|
3 000
|
|
Goodwill
|
870 000
|
|
Listed investments (available for sale)
|
225 000
|
|
Bank loans
|
66 000
|
|
Other loans
|
570 000
|
|
Accounts payable- trade
|
510 000
|
|
Provision for employee benefits
|
93 000
|
|
Provision for warranty
|
37 000
|
|
Current tax liability
|
25 000
|
|
Deferred tax liability
|
135 000
|
|
Retained earnings, 30 June 2015
|
326 000
|
|
Investments revaluation reserve
|
42 000
|
|
Share Capital
|
1 691 000
|
|
Dividends paid
|
150 000
|
|
Land revaluation reserve
|
50 000
|
Required:
For the year ending 30 June, 2016,
1. Using the pro forma table supplied in appendix B, prepare a preliminary trial balance forUnicorn Ltd;
2. Prepare a statement of comprehensive income for Unicorn Ltdin accordance with the requirements of AASB 101. Unicorn Ltd uses the single statement format for the statement of comprehensive income and classifies expenses by function within the statement;
3. Prepare a statement of changes in equity for Unicorn Ltd in accordance with the requirements of AASB 101;
4. Prepare a statement of financial position for Unicorn Ltdin accordance with AASB 101. Use the current/non-current presentation format;
5. Prepare appropriate notes to the accounts.(You do notneed to preparenotes related to income taxes. Include the following note as note
1. You may optionally add accounting policies to this note):
"1. Summary of significant accounting policies
Basis of accounting
The financial report is a general purpose financial report which has been prepared on the historical cost basis, except where stated otherwise.
Statement of Compliance
The financial statements have been prepared in accordance with the requirements of the Corporations Act, Australian Accounting Standards which include Australian equivalents to International Financial Reporting Standards (AIFRSs) and AASB Interpretations. Compliance with AIFRSs ensures the financial statements and notes comply with International Financial Reporting Standards"
PART C
The comparative statement of financial position and statement of profit or loss of Griffin Ltd for the year ended 30 June 2016are as follows:
|
GriffinLtd
Statement of Financial Position
as at 30 June 2016
|
|
|
|
|
2016
|
2015
|
|
Current assets
|
|
|
|
|
Cash at bank
|
|
$ 114 000
|
$ 70 000
|
|
Cash deposits (30-day)
|
|
80 000
|
30 000
|
|
Accounts receivable
|
|
82 000
|
75 000
|
|
Allowance for doubtful debts
|
|
(9 000)
|
(5 000)
|
|
Interest receivable
|
|
4 000
|
3 000
|
|
Inventories
|
|
226 000
|
200 000
|
|
Prepayments
|
|
3 000
|
7 000
|
|
|
|
500 000
|
380 000
|
|
Non-current assets
|
|
|
|
|
Land
|
|
120 000
|
100 000
|
|
Plant
|
|
700 000
|
600 000
|
|
Accumulated depreciation
|
|
(180 000)
|
(140 000)
|
|
Investment in associate
|
|
92 000
|
80 000
|
|
Brand names
|
|
90 000
|
120 000
|
|
|
|
822 000
|
760 000
|
|
Total assets
|
|
$ 1322 000
|
$ 1 140 000
|
|
Current liabilities
|
|
|
|
|
Accounts payable
|
|
$ 196 000
|
$ 180 000
|
|
Interest payable
|
|
18 000
|
12 000
|
|
Current tax payable
|
|
42 000
|
40 000
|
|
|
|
256 000
|
232 000
|
|
Non-current liabilities
|
|
|
|
|
Borrowings
|
|
138 000
|
98 000
|
|
Deferred tax liability
|
|
40 000
|
35 000
|
|
Provision for employee benefits
|
|
33 000
|
20 000
|
|
|
|
211 000
|
153 000
|
|
Total liabilities
|
|
467 000
|
385 000
|
|
Equity
|
|
|
|
|
Share capital
|
|
530 000
|
500 000
|
|
Retained earnings
|
|
325 000
|
255 000
|
|
|
|
855 000
|
755 000
|
|
Total liabilities and equity
|
|
$ 1 322 000
|
$ 1140 000
|
|
GriffinLtd
Statement of Profit or Loss
for the year ended 30June 2016
|
|
Sales
Cost of sales
|
|
|
$ 1? 980? 000
(1? 230? 000)
|
|
|
|
Gross profit
Interest
Share of profits of associate
Gain on sale of plant
|
|
|
750? 000
2? 000
20? 000
8? 000
|
|
|
|
Total income
|
|
|
780? 000
|
|
|
|
Expenses
Salaries and wages
Depreciation
Discount allowed
Doubtful debts
Interest
Other (including impairment of brand names $30? 000)
|
|
|
$ 452? 000
50? 000
8? 000
6? 000
21? 000
86? 000
|
|
|
|
|
|
|
623? 000
|
|
|
|
Profit before tax
Income tax expense
|
|
|
157? 000
(47? 000)
|
|
|
|
Profit for the year
|
|
|
110? 000
|
|
|
Additional information in relation to the year ended 30 June 2016:
a) There were no cash sales during the year.
b) Bad debts written off during the year amounted to $2000
c) 30-day cash deposits are used in the course of the daily cash management of the company
d) There have been no asset revaluations during the year
e) Disposals of plant comprised: original cost $50 000, accumulated depreciation $10 000
f) Movements in "Investment in associate" account comprised $20 000 share of profit of associate less $8 000 dividend received
g) Income tax expense comprises current tax payable component of $42 000 and a deferred tax liability component of $5 000
Required
1. Prepare working papers showing calculations to determine cash flows from operating, investing and financing activities required to be disclosed under AASB 107 using the direct method. Use of T accounts or equations is acceptable;
2. Prepare the Statement of Cash Flows for GriffinLtd for the year ending 30 June 2016 in accordance with AASB 107. Comparatives are not required
3. Provide a reconciliation of net profit after tax with net cash provided by operating activitiesin accordance with AASB1054.