QUESTION 4                                                                                                The following information relates to Beethoven Ltd for the year ended 30th June 2022: BEETHOVEN LTD Statement of Financial Performance as at 30 June 2022           2022         2021        $       $ Assets       Current Assets          Cash at bank 67,710   59,666    Accounts receivable 252,760   283,290    Inventory 1,107,600   951,400    Prepaid expenses 113,600   35,500 Total current assets 1,541,670   1,329,856 Non-current assets          Equipment 1,263,800   823,600    Accumulated depreciation – equipment (238,560)   (143,136) Total non-current assets 1,025,240   680,464 Total Assets 2,566,910   2,010,320  Liabilities       Current Liabilities          Accounts payable 348,916   391,940    Accrued expenses 36,920   44,000    Income tax payable 24,400   28,000 Total current liabilities 410,236   463,940 Non-current liabilities          Bills payable 75,260   45,440    Debentures payable 198,800   284,000 Total non-current liabilities 274,060   329,440 Total Liabilities Net Assets 684,296 1,882,614   793,380 1 216 940  Equity Shareholders’ Equity          Share capital 1,491,000   852,000    Retained profits 391,614   364,940 Total Equity 1,882,614   1,216,940                   Question 4 Cont’d  The Profit or Loss Statement and general ledger for the year ended 30th June 2022 reflected the following:         Sales 3,030,053    Less: sales returns (59,413)   Net sales   2,970,640 Cost of goods sold   1,928,360 General expenses (All expenses EXCLUDING depreciation, bad debts written off & Income tax expense)       606,482 Income tax expense   97,860 Bad debts written off   2,840 Depreciation expense Profit after tax   109,624 $225,474           Additional information:  1.      A fully depreciated machine with a cost of $14,200 was scrapped during the year. No proceeds were received when it was scrapped.  2.      New equipment was purchased for cash during the year for $454,400.  3.      No new debentures were issued during the current year.  4.      As at 1st July 2021, Beethoven had 284,000 shares issued, at an issue price of $3 per share. During the current year, Beethoven issued an additional 213,000 fully paid shares at an issue price of $3 per share.  5.      A cash dividend of 40c per share was declared and paid during the year on all issued shares including those issued during the year.  6.      Bills payable are used by Beethoven as part of their longer-term cash management and are repayable within five years.  Required:  1.      Prepare a cash flow statement for Beethoven Ltd using the Direct method for the year ended 30th June 2022.    2.      If a business raised capital to finance the purchase of a non-current asset, how would this information be reported in the statement of cash flows? What other information might you see on the statement of cash flows in relation to the increase in capital?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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QUESTION 4                                                                                               

The following information relates to Beethoven Ltd for the year ended 30th June 2022:

BEETHOVEN LTD

Statement of Financial Performance

as at 30 June 2022

 

 

      2022

 

      2021

 

     $

 

    $

Assets

 

 

 

Current Assets

 

 

 

   Cash at bank

67,710

 

59,666

   Accounts receivable

252,760

 

283,290

   Inventory

1,107,600

 

951,400

   Prepaid expenses

113,600

 

35,500

Total current assets

1,541,670

 

1,329,856

Non-current assets

 

 

 

   Equipment

1,263,800

 

823,600

   Accumulated depreciation – equipment

(238,560)

 

(143,136)

Total non-current assets

1,025,240

 

680,464

Total Assets

2,566,910

 

2,010,320

 Liabilities

 

 

 

Current Liabilities

 

 

 

   Accounts payable

348,916

 

391,940

   Accrued expenses

36,920

 

44,000

   Income tax payable

24,400

 

28,000

Total current liabilities

410,236

 

463,940

Non-current liabilities

 

 

 

   Bills payable

75,260

 

45,440

   Debentures payable

198,800

 

284,000

Total non-current liabilities

274,060

 

329,440

Total Liabilities

Net Assets

684,296

1,882,614

 

793,380

1 216 940

 Equity

Shareholders’ Equity

 

 

 

   Share capital

1,491,000

 

852,000

   Retained profits

391,614

 

364,940

Total Equity

1,882,614

 

1,216,940

 

 

 

 

 

 

 

 

  Question 4 Cont’d

 The Profit or Loss Statement and general ledger for the year ended 30th June 2022 reflected the following:

 

 

 

 

Sales

3,030,053 

 

Less: sales returns

(59,413)

 

Net sales

 

2,970,640

Cost of goods sold

 

1,928,360

General expenses (All expenses EXCLUDING depreciation, bad debts written off & Income tax expense)

 

 

 

606,482

Income tax expense

 

97,860

Bad debts written off

 

2,840

Depreciation expense

Profit after tax

 

109,624

$225,474

         

Additional information:

 1.      A fully depreciated machine with a cost of $14,200 was scrapped during the year. No proceeds were received when it was scrapped.

 2.      New equipment was purchased for cash during the year for $454,400.

 3.      No new debentures were issued during the current year.

 4.      As at 1st July 2021, Beethoven had 284,000 shares issued, at an issue price of $3 per share. During the current year, Beethoven issued an additional 213,000 fully paid shares at an issue price of $3 per share.

 5.      A cash dividend of 40c per share was declared and paid during the year on all issued shares including those issued during the year.

 6.      Bills payable are used by Beethoven as part of their longer-term cash management and are repayable within five years.

 Required:

 1.      Prepare a cash flow statement for Beethoven Ltd using the Direct method for the year ended 30th June 2022. 

 

2.      If a business raised capital to finance the purchase of a non-current asset, how would this information be reported in the statement of cash flows? What other information might you see on the statement of cash flows in relation to the increase in capital?

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