K K Gross profit 253,000 Administrative expenses 83,600 Loss on sale of vehicle 3,300 Increase in provision for doubtful debts 1,100 Depreciation 38,500 126,500 Net profit 126,500 Taxation 71,500 55,000 Dividends 27,500 Retained profit from the year 27,500 Statement of Financial Position as at 30 June 2020 2019 2020 K K K K Non-Current Assets Motor Vehicle at Cost 150,000 200,000 Less depreciation 75,000 100,000 75,000 100,000 Current Assets Inventory 60,000 50,000 Trade receivables 80,000 100,000 Less: Provision for bad and doubtful debts 4,000 76,000 5,000 95,000 Cash 6,000 8,000 217,000 253,000 Current Liabilities Trade payables 60,000 53,000 Taxation 52,000 65,000 Proposed dividend 20,000 132,000 25,000 143,000 Capital and Reserves Ordinary share capital 75,000 75,000 Profit and Loss account 10,000 85,000 35,000 110,000 217,000 252,000 Additional information: The company purchased some new vehicles during 2020 for K75, 000. During 2020 the company also sold a vehicle for K12, 000 in cash. The vehicle had originally cost K25,000 and K10, 000 had been set aside for depreciation. Required: Prepare a statement of cash flows for Ezekiel Limited for the year ended 30 June 2020. Outline what it tells the managers of Ezekiel Limited.

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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	K	K
Gross profit		253,000
Administrative expenses	83,600
Loss on sale of vehicle	3,300
Increase in provision for doubtful debts	1,100
Depreciation	38,500	126,500
Net profit		126,500
Taxation		71,500
		55,000
Dividends		27,500
Retained profit from the year		27,500

Statement of Financial Position as at 30 June 2020

	2019	2020
	K	K	K	K
Non-Current Assets
Motor Vehicle at Cost		150,000		200,000
Less depreciation		75,000		100,000
		75,000		100,000
Current Assets
Inventory		60,000		50,000
Trade receivables	80,000		100,000
Less: Provision for bad and doubtful debts	4,000	76,000	5,000	95,000
Cash		6,000		8,000
		217,000		253,000
Current Liabilities
Trade payables	60,000		53,000
Taxation	52,000		65,000
Proposed dividend	20,000	132,000	25,000	143,000
Capital and Reserves
Ordinary share capital	75,000		75,000
Profit and Loss account	10,000	85,000	35,000	110,000
		217,000		252,000

Additional information:

The company purchased some new vehicles during 2020 for K75, 000.
During 2020 the company also sold a vehicle for K12, 000 in cash. The vehicle had originally cost K25,000 and K10, 000 had been set aside for depreciation.

Required:

Prepare a statement of cash flows for Ezekiel Limited for the year ended 30 June 2020.
Outline what it tells the managers of Ezekiel Limited.

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