Question 3: Statement of cash flows (8 marks)
You are the accountant for Fun Times Ltd, an Australian trampoline wholesaler. A summary of assets, liabilities and equity of Fun Times Ltd is presented below, together with details of revenue, expenses and profit for the year ended 30 June 2024:
|Assets, liabilities and equityas at 30 June 2024|
|Provision for doubtful debts||(60,000)||(40,000)|
|Accumulated depreciation – plant||(180,000)||(100,000)|
|Provision for annual leave||50,000||30,000|
|Revenue, expenses and profitfor the year ended 30 June 2024|
|Gain on disposal of plant||30,000|
|Cost of goods sold||(500,000)|
|Depreciation – plant||(100,000)|
|Net profit for the year||682,000|
- The following expenses are paid as incurred: rent and interest.
- Accruals of wages are made before payment.
- The carrying amount of plant sold during the year was $100,000.
- The ‘accounts payable’ account is used for inventory purchases.
- The bank overdraft is payable on demand and forms part of cash equivalents.
- Fun Times Ltd classifies interest received as cash flows from investing activities, and interest paid as an operating activity.
Prepare a statement of cash flows in accordance with AASB 107 for the year ended 30 June 2024, using the direct method. Show all relevant workings. Comparative figures and notes are not required. Note: you are not required to consider or account for income tax.