Question 3/ Read the following scenario and answer the questions that follow: Good Hope Manufacturing (Pty) Ltd is a manufacturer of custom office furniture. Below is its Statement of Cash Flows for the year ended 31 December 2020, prepared according to the indirect method: Good Hope Manufacturing (Pty) Ltd Statement of Cash Flows for the year ended 31 December 2020 R'000 R'000 Cash flows from operating activities Profit before tax 25 000 Adjustments for: Depreciation 1 600 (Profit) or loss on sale of equipment Interest expense 2 500 ? (Increase) or decrease in trade and other receivables (Increase) or decrease in inventories Increase in trade payables ? 400 Cash generated from operations Interest paid ? ? Income taxes paid (6 250) Net cash from operating activities 17 500 The following information regarding Good Hope Manufacturing (Pty) Ltd has been provided: 1. Old machinery with a carrying amount of R8 000 000 was sold for R10 000 000. 2. Stock on hand was R2 500 000 on 1 January 2020 and R2 000 000 on 31 December 2020.
Question 3/ Read the following scenario and answer the questions that follow: Good Hope Manufacturing (Pty) Ltd is a manufacturer of custom office furniture. Below is its Statement of Cash Flows for the year ended 31 December 2020, prepared according to the indirect method: Good Hope Manufacturing (Pty) Ltd Statement of Cash Flows for the year ended 31 December 2020 R'000 R'000 Cash flows from operating activities Profit before tax 25 000 Adjustments for: Depreciation 1 600 (Profit) or loss on sale of equipment Interest expense 2 500 ? (Increase) or decrease in trade and other receivables (Increase) or decrease in inventories Increase in trade payables ? 400 Cash generated from operations Interest paid ? ? Income taxes paid (6 250) Net cash from operating activities 17 500 The following information regarding Good Hope Manufacturing (Pty) Ltd has been provided: 1. Old machinery with a carrying amount of R8 000 000 was sold for R10 000 000. 2. Stock on hand was R2 500 000 on 1 January 2020 and R2 000 000 on 31 December 2020.
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter3: Income Flows Versus Cash Flows: Understanding The Statement Of Cash Flow
Section: Chapter Questions
Problem 1EIC
Related questions
Question
Transcribed Image Text:3.
The opening balance for accounts receivables for 2020 is R1 100 000. By
31 December 2020, this amount increased to R2 350 000.
4.
Interest owing (i.e. accrued) at the beginning of the 2020 financial year
was R500 000; this was paid during the year. No interest payments were
outstanding at the end of the year.
Required:
3.1
Complete the 'Cash flows from operating activities' section of the
Statement of Cash Flows for Good Hope Manufacturing (Pty) Ltd for the
year ended 31 December 2020.
Transcribed Image Text:Question 3/
Read the following scenario and answer the questions that follow:
Good Hope Manufacturing (Pty) Ltd is a manufacturer of custom office furniture.
Below is its Statement of Cash Flows for the year ended 31 December 2020,
prepared according to the indirect method:
Good Hope Manufacturing (Pty) Ltd
Statement of Cash Flows for the year ended 31 December 2020
R'000
R'000
Cash flows from operating activities
Profit before tax
25 000
Adjustments for:
Depreciation
1 600
(Profit) or loss on sale of equipment
Interest expense
2 500
?
(Increase) or decrease in trade and other receivables
?
(Increase) or decrease in inventories
Increase in trade payables
?
400
Cash generated from operations
?
Interest paid
?
Income taxes paid
(6 250)
Net cash from operating activities
17 500
The following information regarding Good Hope Manufacturing (Pty) Ltd has been
provided:
1.
Old machinery with a carrying amount of R8 000 000 was sold for
R10 000 000.
2.
Stock on hand was R2 500 000 on 1 January 2020 and R2 000 000 on 31
December 2020.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 1 images
Recommended textbooks for you
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Corporate Financial Accounting
Accounting
ISBN:
9781305653535
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Financial & Managerial Accounting
Accounting
ISBN:
9781337119207
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning