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2102AFE Financial Accounting ? Topic 9 Weekly Workshop Homework Questions

 


 

2102AFE Financial Accounting

 

Weekly Workshop Homework Questions

 

Topic 9 ? Statement of Cash Flows I (Chapter 17)

 

Hewitt Ltd manufactures golf clubs for professional golfers. Hewitt Ltd?s balance sheets for the years

 

ended 30 June 2015 and 2016 are presented below:

 

Hewitt Ltd Balance Sheets as at 30 June

 

2016

 


 

2015

 


 

ASSETS

 

Cash

 

Accounts Receivable

 

Provision for doubtful debts

 

Property, plant and equipment

 

Accumulated depreciation, Property, plant and equip

 

Inventory

 

Total Assets

 


 

960,000

 

360,000

 

(120,000)

 

1,560,000

 

(360,000)

 

920,000

 

3,320,000

 


 

600,000

 

(80,000)

 

1,200,000

 

(200,000)

 

520,000

 

2,040,000

 


 

LIABILITIES

 

Bank Overdraf

 

Accounts Payable

 

Accrued Wages (Wages Payable)

 

Provision for annual leave

 

Loans

 

Total Liabilities

 


 

600,000

 

200,000

 

80,000

 

600,000

 

1,480,000

 


 

400,000

 

600,000

 

160,000

 

120,000

 

1,280,000

 


 

Net Assets

 


 

1,840,000

 


 

760,000

 


 

Represented by:

 

Shareholders? Funds

 

Share Capital

 

Asset Revaluation Reserve

 

Retained Profits

 

Total Shareholders? Funds

 


 

1,400,000

 

280,000

 

160,000

 

1,840,000

 


 

200,000

 

80,000

 

480,000

 

760,000

 


 

1

 


 

2102AFE Financial Accounting ? Topic 9 Weekly Workshop Homework Questions

 

The revenues and expenses of Hewitt Ltd for the year ended 30 June 2016 are as follows:

 

Revenue

 

Sales

 

Interest (no interest receivable at year end)

 

Gain on sale of property (had a carrying value of $100,000)

 


 

$

 

600,000

 

40,000

 

80,000

 


 

Expenses

 

Cost of sales

 

Doubtful debts expense

 

Depreciation expense

 

Wages expense

 

Employee entitlement (annual leave) expense

 


 

400,000

 

80,000

 

200,000

 

200,000

 

160,000

 


 

Net Loss for the year

 


 

(320,000)

 


 

Additional information:

 

Hewitt Ltd classifies interest expense payments as operating cash flows.

 

Required:

 

As part of the preparation for a Cash Flow Statement for Hewitt Ltd:

 

(a) Calculate the amounts received from customers, paid to suppliers and paid to employees, for the

 

year ended 30 June 2016. Show all workings.

 

(b) Using the Proforma provided, set up a Cash Flow Statement for Hewitt Ltd, completing the cash

 

balances at the beginning and end of the year, inserting the amounts calculated in (a), and listing

 

in their correct category all the other items (without amounts) that will appear on the statement.

 


 

2

 


 

2102AFE Financial Accounting ? Topic 9 Weekly Workshop Homework Questions

 


 

Critical Thinking Question

 


 

A senior financial executive for a large public company remarked to a stock market analyst: ?I don?t

 

know why you people worry so much about what is in our statement of cash flows. Managing cash

 

flow is our responsibility as managers; it involves paying close attention to cash on a daily basis. Why

 

don?t you pay attention to our profit and just forget about cash flow? We?ll look afer that!?

 

Required

 

Respond to the executive?s comments, stating reasons for your opinion. Use the AREA framework

 

template provided.

 

ANALYSE (50 words maximum) Identify the issue and why it matters; determine what you need to find

 

out

 


 

RESEARCH and Evaluate (500 words maximum) Gather relevant facts and evidence, sort all evidence,

 

identify themes or issues, AND sort all evidence and weigh it up to start building a picture of what your

 

Answer might be

 


 

ANSWER (50 words maximum) Your opinion of the themes or issues you have identified, justified by

 

the evidence you have gathered and evaluated

 


 

3

 


 

 

Paper#9256113 | Written in 27-Jul-2016

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