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Dividend paid Sales of equipment Gain on sales of investme Net cash from investing

Dividend paid Sales of equipment Gain on sales of investme Net cash from investing

FINANCIAL ACCOUNTING
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 1 (CLO1) Below is the cash flow statement produced by Miss Erina for Kenangan Berhad for the year ended 31 December 2020: Kenanga Bhd Cash Flow Statement for the year ended 31 December 2020 RM RM Cash flow from operating activities Profit before tax 448,000 Adjustments: Depreciation expenses 80,000 Sales of investment 200,000 Loss on sales of equipment 12,000 Increase in account receivables (52,000) Inventory (56,000) Changes in account payable 40,000 224,000 Cash generated from the operation 412,000 Net cash from operating activities 240,000 Cash flow from investing activities Purchase of equipment (128,000) Dividend paid (296,000) Sales of equipment 12,000 Gain on sales of investment (60,000) Net cash from investing activities (472,000) Cash flow from financing activities Payment of long-term loan (32,000) Purchase of investments (20,000) Issuance of ordinary shares 140,000 Income tax expense (89,600) Net cash from financing activities (188,000) Net increase in cash (233,600) Page 1 of 12 Cash and cash equivalents at beginning 204,000 Cash and cash equivalents at the end 320,000 Additional information: 1. The company tax rate is 20%. 2. The opening and closing balances of income tax payable are RM 145,800 and RM 63,400 respectively. Before the cash flow statement is published in the company's annual report, you as the finance executive are assigned to review and approve the statement that has been produced. As a result of the review made, you found several errors in the statement. Based on the above information, а. IDENTIFY the errors that have been made by Miss Erina and DESCRIBE the correct treatment of such errors. b. REPRODUCE the correct cash flow statement of Kenanga Berhad for the year ended 31 December 2020.
Transcribed Image Text:QUESTION 1 (CLO1) Below is the cash flow statement produced by Miss Erina for Kenangan Berhad for the year ended 31 December 2020: Kenanga Bhd Cash Flow Statement for the year ended 31 December 2020 RM RM Cash flow from operating activities Profit before tax 448,000 Adjustments: Depreciation expenses 80,000 Sales of investment 200,000 Loss on sales of equipment 12,000 Increase in account receivables (52,000) Inventory (56,000) Changes in account payable 40,000 224,000 Cash generated from the operation 412,000 Net cash from operating activities 240,000 Cash flow from investing activities Purchase of equipment (128,000) Dividend paid (296,000) Sales of equipment 12,000 Gain on sales of investment (60,000) Net cash from investing activities (472,000) Cash flow from financing activities Payment of long-term loan (32,000) Purchase of investments (20,000) Issuance of ordinary shares 140,000 Income tax expense (89,600) Net cash from financing activities (188,000) Net increase in cash (233,600) Page 1 of 12 Cash and cash equivalents at beginning 204,000 Cash and cash equivalents at the end 320,000 Additional information: 1. The company tax rate is 20%. 2. The opening and closing balances of income tax payable are RM 145,800 and RM 63,400 respectively. Before the cash flow statement is published in the company's annual report, you as the finance executive are assigned to review and approve the statement that has been produced. As a result of the review made, you found several errors in the statement. Based on the above information, а. IDENTIFY the errors that have been made by Miss Erina and DESCRIBE the correct treatment of such errors. b. REPRODUCE the correct cash flow statement of Kenanga Berhad for the year ended 31 December 2020.
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