Wakanda Mulla has presented the following financial data for 2017 : Balance Sheet 2016 2017Non-Current AssetsCostDepnNBV CostDepnNBVGoodwill 260,000 210,000Tangible Assets1,800,000(360,000)1,440,000 2,300,000(450,000)1,850,000Long term Investment 130,000 130,000 1,830,000 2,190,000Current Assets Closing Stock 35,000 55,000 Debtors 65,000 20,000 Short term Investment 40,000 65,000 Bank 0 40,000 Cash 2,000142,000 17,000197,000Total Assets 1,972,000 2,387,000 Capital & Reserves Share Capital 700,000 900,000 General Reserves 250,000 250,000 Retained Profit 210,0001,160,000 50,0001,200,000 Non Current Liability 10% Debenture 700,000 1,000,000 Current Liabilities Creditors 36,000 96,000 Dividends Payable 11000 11000 Tax Payable 20,000 20000 Interest Owing 10,000 60,000 Bank Overdraft 35,000112,000 0187,000Total Equity & Liabilities 1,972,000 2,387,000 Condensed Income Statement PBIT (60,000)Less interest (100,000)Profit before tax (160,000)Less tax 0PAT (160,000) Add Retained Earning b/d 210,000Total Profit for the Year 50,000Less Transfer to Reserves 0 Less Dividends 00Retained Earning c/d 50,000 Tangible asset costing $80,000 with depreciation of $25,000 was sold for a loss of $55,000. Required : Prepare the cash flow statement for the year 2017 Select appropriate items in the cash flow to comment on the state of liquidity and profitability of the company

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Answered: Required : Prepare the cash flow…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 1P

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Wakanda Mulla has presented the following financial data for 2017 :

Balance Sheet 2016 2017

Non-Current Assets	Cost	Depn	NBV	Cost	Depn	NBV
Goodwill			260,000			210,000
Tangible Assets	1,800,000	(360,000)	1,440,000	2,300,000	(450,000)	1,850,000
Long term Investment			130,000			130,000
			1,830,000			2,190,000
Current Assets
Closing Stock		35,000			55,000
Debtors		65,000			20,000
Short term Investment		40,000			65,000
Bank		0			40,000
Cash		2,000	142,000		17,000	197,000
Total Assets			1,972,000			2,387,000

Capital & Reserves
Share Capital		700,000			900,000
General Reserves		250,000			250,000
Retained Profit		210,000	1,160,000		50,000	1,200,000

Non Current Liability
10% Debenture			700,000			1,000,000

Current Liabilities
Creditors		36,000			96,000
Dividends Payable		11000			11000
Tax Payable		20,000			20000
Interest Owing		10,000			60,000
Bank Overdraft		35,000	112,000		0	187,000
Total Equity & Liabilities			1,972,000			2,387,000

Condensed Income Statement

PBIT		(60,000)
Less interest		(100,000)
Profit before tax		(160,000)
Less tax		0
PAT		(160,000)

Add Retained Earning b/d		210,000
Total Profit for the Year		50,000
Less Transfer to Reserves	0
Less Dividends	0	0
Retained Earning c/d		50,000

Tangible asset costing $80,000 with depreciation of $25,000 was sold for a loss of $55,000.

Required :

Prepare the cash flow statement for the year 2017

Select appropriate items in the cash flow to comment on the state of liquidity and profitability of the company

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