Summary
Summary MANCOSA financial Accounting 2B Notes
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Also called financial statement analysis and reporting Standards
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, 2.1 Preparing a Cash Flow StatementThe following example will be used to illustrate the preparation of the cash flow statement of a
company (the same principles apply to sole proprietorships and partnerships):
Figure 2.1: Information to prepare the Cash Flow Statement of Mzansi Limited
MZANSI LIMITED
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31
DECEMBER 2020
R
Sales 1 800 000
Cost of sales (1 125 000)
Gross profit 675 000
Operating expenses (474 000)
Directors’ fees 127 500
Auditor’s fees 67 500
Depreciation 81 000
Loss on sale of asset 21 000
Other non-disclosable costs 177 000
Operating profit 201 000
Other income: Investment income 24 600
Interest expense: on debentures (3 900)
Profit before tax 221 700
Income tax (77 595)
Profit after tax 144 105
,MZANSI LIMITED
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2020
Ordinary share Retained Total
capital earnings
R R R
Balance on 01 January 2019 525 000 263 775 788 775
Issue of ordinary shares 150 000 150 000
Profit for the year 144 105 144 105
Dividends:
Ordinary interim (18 750) (18 750)
Ordinary final (35 250) (35 250)
Balance on 31 December 2019 675 000 353 880 1 028 880
MZANSI LIMITED
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER
2020 2019
R R
ASSETS
Non-current assets 996 090 858 075
Property, plant and equipment (See Note 1) 790 590 699 600
Financial assets: Investment – Subsidiary company 85 500 60 000
Investment – Listed shares (at cost) 120 000 98 475
Current assets 188 925 203 505
Inventories 120 690 119 700
Trade and other receivables 67 335 82 305
Trade debtors 67 335 82 305
Cash and cash equivalents 900 1 500
Bank - 1 000
Petty cash 900 500
Total assets 1 185 015 1 061 580
, EQUITY AND LIABILITIES
Equity 1 028 880 788 775
Share capital 675 000 525 000
Retained earnings 353 880 263 775
Non-current liabilities 30 000 135 000
Long-term borrowings: 13% Debentures 30 000 135 000
Current liabilities 126 135 137 805
Trade and other payables 43 185 59 805
Trade creditors 43 185 59 805
South African Revenue Services (Income tax payable) 45 000 30 000
Shareholders for dividends 35 250 39 000
Bank overdraft 2 700 9 000
Total equity and liabilities 1 185 015 1 061 580
Note 1
Property, plant and equipment
2020 2019
Land and Equipment Vehicles Land and Equipment Vehicles
buildings buildings
R R R R R R
Cost 462 000 242 340 300 000 346 500 188 100 300 000
Acc. depreciation (82 500) (131 250) (45 000) (90 000)
Carrying value 462 000 159 840 168 750 346 500 143 100 210 000
Additional information
1. Equipment was sold for cash, R16 500. The cost price of the equipment sold was
R39 750 and the accumulated depreciation on it to the date of sale was R2 250.
Equipment was also purchased for cash.
2. Additions were made to the buildings for cash.
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