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The statement of financial position of Chamber Ltd. as at 31 December 2020 and 2021 and a summary of the income statement for the year ended 31 December 2021 are as follows: Statement of financial position as at 31 December Non-current assets Land and buildings Plant and machinery Investment Current assets Inventory Trade receivables Cash at bank Total assets Liabilities and equity Current liabilities as Bank overdraft Trade payables Corporation tax Interest payable Non-current liabilities Debentures Capital and reserves $1 ordinary shares Share premium account Revaluation reserve Retained profits Total liabilities and equity 2020 $'000 37,000 16,500 6,000 59,500 11,412 12,784 4,713 28,909 88,409 13,812 1,800 200 15,812 13,000 28,812 20,000 10,000 3,000 26,597 59,597 88,409 2021 $'000 45,000 18,500 6,000 69,500 13,631 10,987 24,618 94,118 490 15,713 250 250 16,703 2,800 19,503 28,000 12,000 8,000 26,615 74,615 94,118

The statement of financial position of Chamber Ltd. as at 31 December 2020 and 2021 and a summary of the income statement for the year ended 31 December 2021 are as follows: Statement of financial position as at 31 December Non-current assets Land and buildings Plant and machinery Investment Current assets Inventory Trade receivables Cash at bank Total assets Liabilities and equity Current liabilities as Bank overdraft Trade payables Corporation tax Interest payable Non-current liabilities Debentures Capital and reserves $1 ordinary shares Share premium account Revaluation reserve Retained profits Total liabilities and equity 2020 $'000 37,000 16,500 6,000 59,500 11,412 12,784 4,713 28,909 88,409 13,812 1,800 200 15,812 13,000 28,812 20,000 10,000 3,000 26,597 59,597 88,409 2021 $'000 45,000 18,500 6,000 69,500 13,631 10,987 24,618 94,118 490 15,713 250 250 16,703 2,800 19,503 28,000 12,000 8,000 26,615 74,615 94,118

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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 Required: (a) Prepare a cash flow statement for Chamber Corp for the year ended 31 December 2021.

(b) Reply to the following questions put to you by one of the directors of the company: 'Can you please explain to me how we have a healthy profit yet our bank overdraft has reached a record level? Surely there must be something wrong with the profit calculations.' 

 

The statement of financial position of Chamber Ltd. as at 31 December 2020 and 2021 and a summary of the income statement for the year ended 31 December 2021 are as follows: Statement of financial position as at 31 December Non-current assets Land and buildings Plant and machinery Investment Current assets Inventory Trade receivables Cash at bank Total assets Liabilities and equity Current liabilities as Bank overdraft Trade payables Corporation tax Interest payable Non-current liabilities Debentures Capital and reserves $1 ordinary shares Share premium account Revaluation reserve Retained profits Total liabilities and equity 2020 $'000 37,000 16,500 6,000 59,500 11,412 12,784 4,713 28,909 88,409 13,812 1,800 200 15,812 13,000 28,812 20,000 10,000 3,000 26,597 59,597 88,409 2021 $'000 45,000 18,500 6,000 69,500 13,631 10,987 24,618 94,118 490 15,713 250 250 16,703 2,800 19,503 28,000 12,000 8,000 26,615 74,615 94,118
Transcribed Image Text:The statement of financial position of Chamber Ltd. as at 31 December 2020 and 2021 and a summary of the income statement for the year ended 31 December 2021 are as follows: Statement of financial position as at 31 December Non-current assets Land and buildings Plant and machinery Investment Current assets Inventory Trade receivables Cash at bank Total assets Liabilities and equity Current liabilities as Bank overdraft Trade payables Corporation tax Interest payable Non-current liabilities Debentures Capital and reserves $1 ordinary shares Share premium account Revaluation reserve Retained profits Total liabilities and equity 2020 $'000 37,000 16,500 6,000 59,500 11,412 12,784 4,713 28,909 88,409 13,812 1,800 200 15,812 13,000 28,812 20,000 10,000 3,000 26,597 59,597 88,409 2021 $'000 45,000 18,500 6,000 69,500 13,631 10,987 24,618 94,118 490 15,713 250 250 16,703 2,800 19,503 28,000 12,000 8,000 26,615 74,615 94,118
Summary income statement for the year ended 31 December Profit before tax (after depreciation of plant and machinery of $2,400,000) Tax Profit after tax Dividend paid $'000 10,518 (2,000) 8,518 3,500 Additional information: 1. During the year, several machines were disposed of for $2,200,000. These machines had a combined original cost of $4,000,000 and had a total net book value of $2,000,000 on the date of disposal. 2. On 1 January 2021, a bonus share was issued to shareholders for every 4 ordinary shares they held. This bonus issue was entirely financed by the available profits. A further share issue was made on the 30 September 2021. 3. Included in the profit before tax was an investment income of $1,250,000 and an interest expense of $510,000.
Transcribed Image Text:Summary income statement for the year ended 31 December Profit before tax (after depreciation of plant and machinery of $2,400,000) Tax Profit after tax Dividend paid $'000 10,518 (2,000) 8,518 3,500 Additional information: 1. During the year, several machines were disposed of for $2,200,000. These machines had a combined original cost of $4,000,000 and had a total net book value of $2,000,000 on the date of disposal. 2. On 1 January 2021, a bonus share was issued to shareholders for every 4 ordinary shares they held. This bonus issue was entirely financed by the available profits. A further share issue was made on the 30 September 2021. 3. Included in the profit before tax was an investment income of $1,250,000 and an interest expense of $510,000.
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