The cash flows below were extracted from the accounts of Willow Ltd shop owner.Required:Prepare a statement of cash flows using the direct method for the year ended 31 December 2020.Prepare a separate reconciliation statement to see how this relates to the cash of the business at the beginning and end of the year. What does the statement of cash flows tell us about a business. Acquisition of subsidiaryProceeds from issue of share capitalCash paid to suppliers and employeesPurchase of property, plant and equipmentProceeds from long-term borrowingsInterest paidIncome taxes paid55025027,600350250270900Dividends received200Payment of finance lease liabilitiesProceeds from sale of equipmentCash receipts from customers902030,150200Interest receivedDividends paidCash and cash equivalents at end of period (31/12/20)1,200270

Cash flow statements refer to those financial documents of a company that reflects the movement of…

Answered: e cash flows below were extracted from…

e cash flows below were extracted from the accounts of Willow Ltd shop owner. Required: Prepare a statement of cash flows using the direct method for the year ended 31 December 2020. Prepare a se

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 1C

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Question

The cash flows below were extracted from the accounts of Willow Ltd shop owner.

Required:

Prepare a statement of cash flows using the direct method for the year ended 31 December 2020.
Prepare a separate reconciliation statement to see how this relates to the cash of the business at the beginning and end of the year.
What does the statement of cash flows tell us about a business.

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
550
250
27,600
350
250
270
900
Dividends received
200
Payment of finance lease liabilities
Proceeds from sale of equipment
Cash receipts from customers
90
20
30,150
200
Interest received
Dividends paid
Cash and cash equivalents at end of period (31/12/20)
1,200
270

Definition Definition Document prepared to identify any discrepancies between the passbook, which logs bank transactions, and the cash book, where a business tracks its own cash and bank transactions, so that corrective measures may be taken to reconcile the differences.

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