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    Cash Flow Statement Assignment

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    Youngsonya Jubecking
    The company experienced a decline in cash reserves despite profits before tax. To explain this to the directors, a cash flow statement was prepared for the year ended December 31, 20X7. The statement showed that while the company was profitable, it had significant cash outflows from investing and financing activities that exceeded the cash generated from operations. These included purchases of property, plant, equipment, and intangible assets, repayments of debts, and dividend payments to shareholders.

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    Cash Flow Statement Assignment

    Uploaded by

    Youngsonya Jubecking
    43 views2 pages
    The company experienced a decline in cash reserves despite profits before tax. To explain this to the directors, a cash flow statement was prepared for the year ended December 31, 20X7. The statement showed that while the company was profitable, it had significant cash outflows from investing and financing activities that exceeded the cash generated from operations. These included purchases of property, plant, equipment, and intangible assets, repayments of debts, and dividend payments to shareholders.

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    The company experienced a decline in cash reserves despite profits before tax. To explain this to the directors, a cash flow statement was prepared for the year ended December 31, 20X7. The statement showed that while the company was profitable, it had significant cash outflows from investing and financing activities that exceeded the cash generated from operations. These included purchases of property, plant, equipment, and intangible assets, repayments of debts, and dividend payments to shareholders.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    43 views2 pages

    Cash Flow Statement Assignment

    Uploaded by

    Youngsonya Jubecking
    The company experienced a decline in cash reserves despite profits before tax. To explain this to the directors, a cash flow statement was prepared for the year ended December 31, 20X7. The statement showed that while the company was profitable, it had significant cash outflows from investing and financing activities that exceeded the cash generated from operations. These included purchases of property, plant, equipment, and intangible assets, repayments of debts, and dividend payments to shareholders.

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    © All Rights Reserved
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    Cash Flow Statement (Assignment)

    During the Annual General Meeting of Wajuvi Limited, the directors were concerned about a decline in the cash
    reserves of the Company. One director in particular, Mbaba, could not understand why, “if the company has made
    profits before Tax of TZS.100,000,000, there should be a decline in the Company’s liquidity”. Provided below are
    the statements of the financial position of the Company for the year ended 31st December 20X7:
    Figures “000”

    Assets December 31 January 1


    TZS. TZS.
    Bank and Cash 250,000 450,000
    Marketable securities - 150,000
    Accounts receivable 850,000 660,000
    Prepaid expenses 40,000 30,000
    Inventories 970,000 790,000
    Machinery at cost 670,000 500,000
    Building at cost 590,000 740,000
    Provision for depreciation, machinery (160,000) (170,000)
    Provision for depreciation, buildings (230,000) (250,000)
    Land at cot 400,000 -
    Organization cost 20,000 30,000
    Patent No. 4115 - 50,000
    Goodwill _120,000 __70,000
    2,850,000 3.050,000
    Liabilities and Shareholders’ Equity:
    Accounts payable 740,000 630,000
    Accrued expenses 60,000 30,000
    Long-term debt 125,000 295,000
    Bank loan due in 2011 850,000 650,000

    Reserve for guarantee 80,000 50,000


    Reserve for casualty losses 40,000 60,000
    Discount on ordinary shares (90,000) (60,000)
    Ordinary shares capital 900,000 600,000
    Profit and loss A/C _815,000 _795,000
    2,850,000 3,050,000
    Additional information:
    (a) A machine with an original cost price of TZS. 90,000,000 was sold at a loss of TZS. 20,000,000. Provision
    for depreciation on this machine is TZS. 40,000,000. Additional machines were purchased for a total of
    TZS. 260,000,000.
    During the year 20X7, TZS. 120,000,000 was spent on extraordinary repairs on machinery. The
    expenditure was debited to the provision for depreciation on machinery account.

    (b) A separate building with an original cost price of TZS. 150,000,000, was sold at a profit of TZS.
    130,000,000. Provision for depreciation on this building is TZS. 60,000,000.

    (c) Goodwill was purchased for TZS. 80,000,000.

    (d) Patent NO. 4115 was sold at the end of the year at a loss of TZS. 25,000,000. The patent was amortized for
    TZS. 10,000,000 in 20X7.

    (e) Additional ordinary shares were issued and sold for cash at a discount.

    (f) A 10% dividend was paid in 20X7 to Shareholders before the issue of new shares.
    Required:
    Prepare a statement of cash flows for Wajuvi Ltd. for the year ended December 31, 20X7 and explain to the
    Directors why liquidity of the Company declined during the year.

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