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Solution Aman BHD

The document summarizes the workings for preparing a statement of cash flows for Aman Bhd for the year ended 31 December 2018 using the indirect method. It shows cash inflows from operating activities of RM550,000, cash outflows from investing activities of RM840,000, and cash inflows from financing activities of RM420,000, resulting in an overall increase in cash and cash equivalents of RM130,000. It also provides additional details on the cash flows from various transactions such as acquisition of non-current assets, bank loans, and dividend payments.

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IZZAH ATHIRAH MOHD SALIMI
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54 views

Solution Aman BHD

The document summarizes the workings for preparing a statement of cash flows for Aman Bhd for the year ended 31 December 2018 using the indirect method. It shows cash inflows from operating activities of RM550,000, cash outflows from investing activities of RM840,000, and cash inflows from financing activities of RM420,000, resulting in an overall increase in cash and cash equivalents of RM130,000. It also provides additional details on the cash flows from various transactions such as acquisition of non-current assets, bank loans, and dividend payments.

Uploaded by

IZZAH ATHIRAH MOHD SALIMI
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Statement of Cash Flows

FAR210
SAMPLE ANSWER – AMAN BHD (DEC2018)

Workings:

Tax paid

Tax Expense Account


DR CR Balance
Balance b/d 140,000 140,000
SOPL 120,000 260,000
Bank 130,000 130,000 CR*

*tax payable - bal c/d

Acquisition of land

Land Account
DR CR Balance
Balance b/d 1,100,000 1,100,000
Bank 360,000 1,460,000

Acquisition of machinery

Machinery Account (*at net carrying amount)


DR CR Balance
Balance b/d 400,000 400,000
Depreciation 180,000 220,000
Bank 290,000 510,000

 if the amount in the property, plant and equipment account is given at net carrying
amount (that is after deducting the accumulated depreciation from its cost), we have
to include the depreciation expense as adjustment in the property, plant and equipment
account before we can determine the amount of property, plant and equipment
purchased during the year.

Acquisition of long term investments

Investment Account
DR CR Balance
Balance b/d 100,000 100,000
Bank 270,000 370,000

HH/FAR210 – JUN2020 1
Statement of Cash Flows

Investment income

Refer additional information no. 4.

Proceeds from bank loan

Bank Loan Account


DR CR Balance
Balance b/d 0 0
Bank 350,000 350,000

Proceed from sales of treasury shares

The amount for cash inflow (proceeds) from the sales of treasury shares is given in the
additional information no. 3, RM150,000.

Are there any issuance of ordinary shares???

From the Statement of Financial Position, we can see that there is an increase in the ordinary
share capital account. Before we can conclude that there is a new issue of shares during the
year (as there is an increase in the ordinary share capital account), we must relate the effect
of sales of treasury shares to the ordinary share capital account.

First compare the cost and the selling price of the treasury shares:

Cost of the treasury shares 100,000


Selling price of treasury shares 150,000
Gain 50,000

Construct the ordinary share capital and treasury shares accounts:

Ordinary Share Capital Account


DR CR Balance
Balance b/d 1,050,000 1,050,000
Treasury shares 50,000 1,100,000

Treasury Shares Account


DR CR Balance
Balance b/d 100,000 100,000
Bank 150,000 (50,000)
Ordinary share capital 50,000 0

 The ordinary share capital account shows that there is no new issue of shares during
the year. The increase in the ordinary share capital account is due to the gain from
sales of treasury shares.

HH/FAR210 – JUN2020 2
Statement of Cash Flows

Dividend Paid

Additional information no. 7:

Last year’s dividend was paid together with the current year’s interim dividend of RM160,000.

Refer SOFP for last year’s


dividend payable
= RM170,000

Dividends paid:

Last year's dividend 170,000


Current year's interim dividend 160,000
Total paid 330,000

Proceeds from issue of preference shares

Preference Share Capital Account


DR CR Balance
Balance b/d 450,000 450,000
Bank 250,000 700,000

Theory question (b):


b) If a company consistently has a negative cash flow, it can be said that the company is
suffering from liquidity problems and may not be able to continue to be in operation for long in
the future. As a result, the company could not replace and expand the operation capacity. For
example, the company could not purchase non-current assets and unable to repay long-term
loan.

HH/FAR210 – JUN2020 3
Statement of Cash Flows

Indirect Method:

Aman Bhd
Statement of Cash Flows for the year ended 31 December 2018
RM
Profit Before Tax 555,000

Adjustments:
Depreciation expense 180,000
Interest expense 35,000
Investment Income (80,000)
Operating profit before working capital changes 690,000
Increase in Inventories (10,000)
Increase in receivables (25,000)
Increase in payables 10,000
Increase in accrued distribution cost 15,000
Cash generated/(outflow) from operation 680,000
Tax paid (130,000)
Net Cash Flow From Operating Activities 550,000

CASH FLOW FROM INVESTING ACTIVITIES


Acquisition of land (360,000)
Acquisition of machinery (290,000)
Acquisition of long term investments (270,000)
Investment income 80,000
Net Cash Flow From Investing Activities (840,000)

Cash Flow From Financing Activities


Proceeds from bank loan 350,000
Proceed from sales of treasury shares 150,000
Proceed from issue of preference shares 250,000
Dividend Paid (330,000)
Net cash flow from financing activities 420,000
Net Increase/(decrease) in cash and cash equivalents 130,000
Cash and cash equivalents at the beginning of the year (b/d) 420,000
Cash and cash equivalents at the end of the year (c/d) 550,000

Beginning
of the End of
Cash and Cash Equivalents year the year Changes

Short-term investments 180,000 220,000 40,000


Cash at bank 240,000 330,000 90,000
Cash and Cash Equivalents 420,000 550,000 130,000

HH/FAR210 – JUN2020 4

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