a) Prepare a statement of cash flows using the direct method for the year ended 31 December 2020. The cash flows below were extracted from the accounts of Willow Ltd shop owner. Netcash equivalent at beginning of period total £160.3.Acquisition of subsidiaryProceeds from issue of share capitalCash paid to suppliers and employeesPurchase of property, plant and equipmentProceeds from long-term borrowingsInterest paidIncome taxes paidDividends receivedPayment of finance lease liabilitiesProceeds from sale of equipmentCash receipts from customers55025027,600350250270900200902030,150Interest received200Dividends paidCash and cash equivalents at end of period (31/12/20)1,200270

A cash flow statement is the part of the financial statement which is prepared by the company to…

Answered: a) Prepare a statement of cash flows…

Business

Accounting

a) Prepare a statement of cash flows using the direct method for the year ended 31 December 2020.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

a) Prepare a statement of cash flows using the direct method for the year ended 31 December 2020.

The cash flows below were extracted from the accounts of Willow Ltd shop owner. Net
cash equivalent at beginning of period total £160.
3.
Acquisition of subsidiary
Proceeds from issue of share capital
Cash paid to suppliers and employees
Purchase of property, plant and equipment
Proceeds from long-term borrowings
Interest paid
Income taxes paid
Dividends received
Payment of finance lease liabilities
Proceeds from sale of equipment
Cash receipts from customers
550
250
27,600
350
250
270
900
200
90
20
30,150
Interest received
200
Dividends paid
Cash and cash equivalents at end of period (31/12/20)
1,200
270

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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