Effect of transactions on cash flows The financial year for Gamma Limited ends on 30 June 2019. Management has asked you what effect each of the following June transactions will have on net profit before tax, cash flow from operations, cash flow from investing and cash flow from financing for the year ended 30 June 2019: 1. Sent invoices for $40 000 to customers during June for work carried out in June; $19 000 of this had been collected by year-end. 2. Borrowed $300 000 from the bank on 10 June, with principal and interest repayable in six months. Accrued interest at 30 June is $2500. 3. Paid salaries for the month of $80 000, with $5000 in wages owing at year-end. 4. Received $30 000 deposit on a job that will be carried out in July 2019. 5. Paid accounts payable of $35 000 which was outstanding at 31 May 2019. 6. Sold old equipment for $20 000. The equipment originally cost $300 000 with accumulated depreciation at the time of sale of $250 000. 7. Purchased new equipment on 20 June 2019 for $220 000 cash. Depreciation on this equipment for June 2019 amounted to $900. 8. Declared and paid dividends of $180 000 in June 2019.
Effect of transactions on cash flows
The financial year for Gamma Limited ends on 30 June 2019.
Management has asked you what effect each of the following June transactions will have on net profit before tax, cash flow from operations, cash flow from investing and cash flow from financing for the year ended 30 June 2019:
1. Sent invoices for $40 000 to customers during June for work carried out in June; $19 000 of this had been collected by year-end.
2. Borrowed $300 000 from the bank on 10 June, with principal and interest repayable in six months. Accrued interest at 30 June is $2500.
3. Paid salaries for the month of $80 000, with $5000 in wages owing at year-end.
4. Received $30 000 deposit on a job that will be carried out in July 2019.
5. Paid accounts payable of $35 000 which was outstanding at 31 May 2019.
6. Sold old equipment for $20 000. The equipment originally cost $300 000 with accumulated
7. Purchased new equipment on 20 June 2019 for $220 000 cash. Depreciation on this equipment for June 2019 amounted to $900.
8. Declared and paid dividends of $180 000 in June 2019.
Trotman, Ken, et al. Financial Accounting : An Integrated Approach, Cengage, 2019.
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