You have been given the following information relating to Cecair Sdn. Bhd. (Cecair): Statement of profit or loss for the year ended 31 December 2022 RM’000 Revenue 75,000 Cost of sales (35,000) Gross profit 40,000 Other income 375 Distribution costs (11,000) Administrative expenses (7,750) Finance costs (2,250) Profit before tax 19,375 Tax expenses (3,125) Profit for the year 16,250 Statements of financial position as at 31 December 2022 2021 Non-current assets RM’000 RM’000 Property, plant and equipment 125,000 120,000 Current assets Inventories 32,500 38,250 Trade receivables 15,000 18,550 Fixed deposits 3,750 2,700 Cash at bank 1,250 5,000 52,500 64,500 177,500 184,500 Equity and liabilities Share capital 90,000 76,000 Retained earnings 43,750 37,250 Total equity 133,750 113,250 Non-current liabilities 5% bank loan 7,900 29,000 Current liabilities Trade payables 27,500 32,000 Tax payable 850 500 Dividend payable 250 550 Bank overdraft 7,250 9,200 35,850 42,250 177,500 184,500 Additional information: 1. Profit before tax of RM19,375,000 is stated after charging depreciation of RM6,875,000 which was included in both administrative expenses and distribution costs. 2. Other income stated in the statement of profit or loss is interest received on the fixed deposits. 3. Salaries paid to employees for both administrative and marketing departments amounted to RM3,000,000 and RM5,000,000 respectively. 4.During the year, the company sold a property for RM7,000,000, realising a gain of RM2,000,000. The administrative expenses shown in the statement of profit or loss included this gain on disposal. There were no other disposals of property, plant and equipment during the year. 5. The breakdown of property, plant and equipment is as follows: 2022 2021 Cost 164,750 155,500 Accumulated depreciation (39,750) (35,500) Carrying amount 125,000 120,000 Required: Prepare the statement of cash flows of Cecair Sdn. Bhd. for the year ended 31 December 2022 in accordance with IAS 7 Statement of Cash Flows, using the direct method. You are required to show all relevant workings.
Question
You have been given the following information relating to Cecair Sdn. Bhd. (Cecair): Statement of profit or loss for the year ended 31 December 2022 RM’000 Revenue 75,000 Cost of sales (35,000) Gross profit 40,000 Other income 375 Distribution costs (11,000) Administrative expenses (7,750) Finance costs (2,250) Profit before tax 19,375 Tax expenses (3,125) Profit for the year 16,250 Statements of financial position as at 31 December 2022 2021 Non-current assets RM’000 RM’000 Property, plant and equipment 125,000 120,000 Current assets Inventories 32,500 38,250 Trade receivables 15,000 18,550 Fixed deposits 3,750 2,700 Cash at bank 1,250 5,000 52,500 64,500 177,500 184,500 Equity and liabilities Share capital 90,000 76,000 Retained earnings 43,750 37,250 Total equity 133,750 113,250 Non-current liabilities 5% bank loan 7,900 29,000 Current liabilities Trade payables 27,500 32,000 Tax payable 850 500 Dividend payable 250 550 Bank overdraft 7,250 9,200 35,850 42,250 177,500 184,500 Additional information: 1. Profit before tax of RM19,375,000 is stated after charging depreciation of RM6,875,000 which was included in both administrative expenses and distribution costs. 2. Other income stated in the statement of profit or loss is interest received on the fixed deposits. 3. Salaries paid to employees for both administrative and marketing departments amounted to RM3,000,000 and RM5,000,000 respectively. 4.During the year, the company sold a property for RM7,000,000, realising a gain of RM2,000,000. The administrative expenses shown in the statement of profit or loss included this gain on disposal. There were no other disposals of property, plant and equipment during the year. 5. The breakdown of property, plant and equipment is as follows: 2022 2021 Cost 164,750 155,500 Accumulated depreciation (39,750) (35,500) Carrying amount 125,000 120,000 Required: Prepare the statement of cash flows of Cecair Sdn. Bhd. for the year ended 31 December 2022 in accordance with IAS 7 Statement of Cash Flows, using the direct method. You are required to show all relevant workings.
Solution
To prepare the statement of cash flows for Cecair Sdn. Bhd. for the year ended 31 December 2022, we will follow the steps below:
Step 1: Calculate the cash flow from operating activities
Cash received from customers = Opening trade receivables + Revenue - Closing trade receivables = 18,550 + 75,000 - 15,000 = RM 78,550,000
Cash paid to suppliers = Opening inventories + Cost of sales - Closing inventories = 38,250 + 35,000 - 32,500 = RM 40,750,000
Cash paid to employees = Salaries paid to employees for both administrative and marketing departments = 3,000 + 5,000 = RM 8,000,000
Cash generated from operations = Cash received from customers - Cash paid to suppliers - Cash paid to employees = 78,550 - 40,750 - 8,000 = RM 29,800,000
Interest received = Other income = RM 375,000
Income taxes paid = Opening tax payable + Tax expenses - Closing tax payable = 500 + 3,125 - 850 = RM 2,775,000
Net cash from operating activities = Cash generated from operations + Interest received - Income taxes paid = 29,800 + 375 - 2,775 = RM 27,400,000
Step 2: Calculate the cash flow from investing activities
Purchase of property, plant, and equipment (PPE) = Opening PPE + Depreciation + Disposal - Closing PPE = 120,000 + 6,875 + 7,000 - 125,000 = RM 8,875,000
Proceeds from sale of PPE = Sale of property = RM 7,000,000
Net cash used in investing activities = Purchase of PPE - Proceeds from sale of PPE = 8,875 - 7,000 = RM 1,875,000
Step 3: Calculate the cash flow from financing activities
Repayment of bank loan = Opening bank loan - Closing bank loan = 29,000 - 7,900 = RM 21,100,000
Dividends paid = Opening dividend payable + Retained earnings - Closing dividend payable = 550 + 16,250 - 250 = RM 16,550,000
Net cash used in financing activities = Repayment of bank loan + Dividends paid = 21,100 + 16,550 = RM 37,650,000
Step 4: Calculate the net increase/decrease in cash and cash equivalents
Net increase/decrease in cash and cash equivalents = Net cash from operating activities - Net cash used in investing activities - Net cash used in financing activities = 27,400 - 1,875 - 37,650 = - RM 12,125,000
Step 5: Calculate the cash and cash equivalents at the beginning and end of the year
Cash and cash equivalents at the beginning of the year = Cash at bank - Bank overdraft = 5,000 - 9,200 = - RM 4,200,000
Cash and cash equivalents at the end of the year = Cash and cash equivalents at the beginning of the year + Net increase/decrease in cash and cash equivalents = -4,200 - 12,125 = - RM 16,325,000
This is a simplified version of the cash flow statement. The actual statement may include more details and adjustments based on the company's specific transactions and accounting policies.
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