The statement of financial position of Michael Limited at 31 December, 2017 and 2018 were as follows: Notes 31/12/2017 31/12/2018 GHȼ000 GHȼ000 Non-current assets Tangible assets 1 730 1,100 Investment at cost 2 100 50 830 1,150 Current assets Inventory 80 110 Receivables 110 180 Cash at banks 20 30 210 320 1,040 1,470 Equity Stated capital 4 500 680 Capital surplus 5 100 200 Income surplus 200 190 800 1,070 Non-current liabilities 10% loan notes 3 100 150 900 1,220 Current liabilities Trade payables 100 120 Bank overdraft 40 130 140 250 1,040 1,470 Notes Tangible assets: During the year tangible assets with a net book value of GHȼ80,000 were sold for GHȼ60,000. The depreciation charge for the year on all tangible assets held at the end of the year was GHȼ100,000. Investments: Investments which cost GHȼ50,000 were sold during the year for GHȼ40,000. 10% Loan notes: GHȼ50,000 of 10% loan notes were issued on 1 January 2018. All interest to 31st December has been paid. Stated capital: The Company’s stated capital at 31 December 2017 consisted of GHȼ500,000 of ordinary shares. Another 80,000 shares were issued during the year at a price of GHȼ2.25 per share. Capital surplus: The freehold land and buildings were revalued upwards by GHȼ100,000 during the year. Required: Prepare the company’s statement of cash flows fo

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 103.3C

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The statement of financial position of Michael Limited at 31 December, 2017 and 2018 were as follows:

	Notes	31/12/2017	31/12/2018
		GHȼ000	GHȼ000
Non-current assets
Tangible assets	1	730	1,100
Investment at cost	2	100	50
		830	1,150
Current assets
Inventory		80	110
Receivables		110	180
Cash at banks		20	30
		210	320
		1,040	1,470
Equity
Stated capital	4	500	680
Capital surplus	5	100	200
Income surplus		200	190
		800	1,070
Non-current liabilities
10% loan notes	3	100	150
		900	1,220
Current liabilities
Trade payables		100	120
Bank overdraft		40	130
		140	250
		1,040	1,470

Notes

Tangible assets: During the year tangible assets with a net book value of GHȼ80,000 were sold for GHȼ60,000. The depreciation charge for the year on all tangible assets held at the end of the year was GHȼ100,000.
Investments: Investments which cost GHȼ50,000 were sold during the year for GHȼ40,000.
10% Loan notes: GHȼ50,000 of 10% loan notes were issued on 1 January 2018. All interest to 31^st December has been paid.
Stated capital: The Company’s stated capital at 31 December 2017 consisted of GHȼ500,000 of ordinary shares. Another 80,000 shares were issued during the year at a price of GHȼ2.25 per share.
Capital surplus: The freehold land and buildings were revalued upwards by GHȼ100,000 during the year.

Required:

Prepare the company’s statement of cash flows for the year ended 31 December 2018 complying with IAS 7 Statements of cash flows. Ignore taxation.

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