Chapter 13 Statement of cash flow

Question 13.1

BLACK & BERRY LIMITED

STATEMENT OF CASH FLOW
FOR THE YEAR ENDED 31 DECEMBER 20.11
20.11 20.11
Notes R R
Cash flow from operating activities
Cash receipts from customers (Calculation 1) 699,000
Cash paid to suppliers and employees (Calculation 2) -590,550
Cash generated from operations 1 108,450
Dividends received 5,000
Interest received 30,000
Interest paid -13,450
Net cash flow from operating activities 130,000

Cash flow from investing activities

Purchase of equipment: Expansion -100,000
Proceeds from investment (150000 - 100000) 50,000
Net cash flow from investing activities -50,000

Cash flow from financing activities

Proceeds from issue of share capital (275000 - 175000) 100,000
Payment of short-term bank loan (0 - 50000) -50,000
Net cash flow from financing activities 50,000
Net increase in cash and cash equivalents 130,000
Cash and cash equivalents at beginning of period 50,000
Cash and cash equivalents at end of period 180,000

BLACK & BERRY LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 20.11

1. Reconciliation of profit before tax with cash generated from operations

20.11
R
Profit before tax 229,000
Adjusted for:
Interest income -30,000
Interest expense 13,450
Dividends received -5,000
Depreciation 50,000
Changes in working capital:
Increase in inventory -125,000
Decrease in creditors -24,000
Cash generated from operations 108,450

1. Cash receipts from customers

Debtors - opening balance 25,000
Sales (cash and credit) 650,000
Less: Credit losses -1,000
Less: Debtors - closing balance -25,000
Rental income 50,000
699,000

2. Cash paid to suppliers and employees

Creditors - opening balance -132,500
Purchases -465,000
Freight costs -35,000
Salaries and wages -36,000
Water and electricity -10,500
Stationery -3,800
Commission paid -16,250
Creditors - closing balance 108,500
-590,550
Chapter 13 Statement of cash flow

Question 12.2

OPM INCORPORATED
STATEMENT OF CASH FLOW
FOR THE YEAR ENDED 31 DECEMBER 20.11
20.11 20.11
Notes R R
Cash flow from operating activities
Cash receipts from customers (Calculation 1) 6,751,140
Cash paid to suppliers and employees (Given) -6,679,815
Cash generated from operations 1 71,325
Interest paid -43,750
Taxation paid -103,995
Dividends paid* -12,500
Net cash flow from operating activities -88,920

Cash flow from investing activities

Proceeds from sale of vehicle 25,000
Payment of amount into investment (notice deposit) -625,000
Net cash flow from investing activities -600,000

Cash flow from financing activities

Proceeds from issue of ordinary share capital 625,000
Proceeds from issue of preference share capital 250,000
Proceeds from long-term loan 500,000
Net cash flow from financing activities 1,375,000
Net increase in cash and cash equivalents 686,080
Cash and cash equivalents at beginning of period (331488 - 1250) -330,238
Cash and cash equivalents at end of period 355,842
(373343 + 1250 + 25000 - 43750) 355,843

1. Cash receipts from customers

Debtors - opening balance 150,000
Sales (cash and credit) (125/25 × 1375000) 6,875,000
Less: Credit losses (includes adjustment of allowance account) -11,360
Less: Debtors - closing balance -262,500
6,751,140

OPM INCORPORATED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 20.11

1. Reconciliation of profit before tax with cash generated from operations

20.11
R
Profit before tax (Calculation 2) 417,662
Adjusted for:
Interest expense 43,750
Depreciation 110,000
Allowance for credit losses 1,250
Changes in working capital:
Increase in inventory -50,000
Decrease in creditors -338,837
Increase in debtors -112,500
Cash generated from operations 71,325

2. Profit before tax

Gross profit 1,375,000
Administrative expenses -29,928
Other operating expenses -869,480
Distribution expenses -26,680
Interest on loan -43,750
Profit on sale of asset 12,500
Profit before tax 417,662

* Can also deduct dividend tax from dividends and include it in "taxation paid".
Question 13.3

MASSA BULK TRADERS (PTY) LTD

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 28 FEBRUARY 20.11
20.11 20.11
Notes R R

Cash flow from operating activities

Cash receipts from customers (Calculation 1) 820,171
Cash paid to suppliers and employees (Calculation 2) -800,513
Cash generated from operations 1 19,658
Tax paid -23,125
Dividends paid* (8000 + 7000 - 7000) -8,000
Net cash flow from operating activities -11,467

Cash flow from investing activities

Purchase of equipment -105,000
Purchase of land and buildings -250,000
Purchase of vehicle -95,000
Proceeds with sale of vehicle 15,000
Net cash flow from investing activities -435,000

Cash flow from financing activities

Proceeds with issue of shares 444,467
Net cash flow from financing activities 444,467
Net decrease in cash and cash equivalents -2,000
Cash and cash equivalents at beginning of period -
Cash and cash equivalents at end of period -2,000
(-17500+500+15000) -2,000

MASSA BULK TRADERS (PTY) LTD

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDE 28 FEBRUARY 20.11

1. Reconciliation of profit before tax with cash generated from operations

20.11
R
Profit before tax (Calculation 3) 46,092
Adjusted for:
Depreciation 30,500
Increase in allowance for credit losses 2,500
Loss on sale of asset 3,000
Working capital changes:
Increase in debtors -47,000
Increase in inventory -80,000
Increase in creditors 64,566
Cash generated from operations 19,658

1. Cash receipts from customers

Debtors - opening balance -
Sales (cash and credit) (174111/20 × 100) 870,555
Less: Credit losses (384 + 3000) -3,384
Less: Debtors - closing balance -47,000
820,171

2. Cash paid to suppliers and employees

Creditors - opening balance -
Purchases -776,444
Salaries -64,848
Rates and taxes -3,592
Water and electricity -6,109
Distribution cost -1,870
Admin expenses (4621-2500) -2,121
Bank charges -595
Auditors remuneration -1,500
Operating lease payments -8,000
Creditors - closing balance 64,566
-800,513

3. Profit before tax

Sales 870,555
Cost of sales -696,444
Gross profit 174,111
Salaries -64,848
Rates and taxes -3,592
Water and electricity -6,109
Distribution cost -1,870
Admin expenses -4,621
Credit losses (384 + 3000) -3,384
Bank charges -595
Auditors remuneration -1,500
Operating lease expense -8,000
Depreciation (95000 × 10% = 9500) + (105000 × 20% = 21 000) -30,500
Loss on disposal of asset (15000 - (20000 - 2000)) -3,000
Profit before tax 46,092
Tax -23,125
Profit after tax 22,967

* Can also deduct dividend tax from dividends and include it in "taxation paid".
Question 13.4

ALLEN SHOPS
STATEMENT OF CASH FLOW
FOR THE YEAR ENDED 31 DECEMBER 20.11
20.11 20.11
Notes R R
Cash flow from operating activities
Profit before tax 1,500
Adjusted for:
Depreciation 150
Working capital changes:
Increase in inventory -900
Increase in debtors -1,200
Increase in creditors 1,500
Cash generated from operations 1,050
Drawings -3,000
Net cash flow from operating activities -1,950

Cash flow from investing activities

Purchase of equipment -750
Net cash flow from investing activities -750

Cash flow from financing activities

Net cash flow from financing activities -
Net decrease in cash and cash equivalents -2,700
Cash and cash equivalents at beginning of period 1,200
Cash and cash equivalents at end of period -1,500
Question 13.5

MOSSIE LIMITED
STATEMENT OF CASH FLOW
FOR THE YEAR ENDED 28 FEBRUARY 20.11
20.11 20.11
Notes R R
Cash flow from operating activities
Cash receipts from customers (Calculation 1) 486,050
Cash paid to suppliers and employees (Calculation 2) -453,695
Cash generated from operations 1 32,355
Interest paid -5,850
Dividends paid -19,000
Tax paid -26,450
Net cash flow from operating activities -18,945

Cash flow from investing activities

Purchase of land and buildings -45,000
Purchase of vehicles -13,000
Proceeds with sale of equipment 2,945
Net cash flow from investing activities -55,055

Cash flow from financing activities

Payment of long-term loan -15,000
Issue of shares 50,000
Net cash flow from financing activities 35,000
Net decrease in cash and cash equivalents -39,000
Cash and cash equivalents at beginning of period 32,600
Cash and cash equivalents at end of period -6,400

MOSSIE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDE 28 FEBRUARY 20.11

1. Reconciliation of profit before tax with cash generated from operations

20.11
R
Profit before tax 56,230
Adjusted for:
Depreciation 4,250
Interest expense 5,850
Operating profit before changes in working capital 66,330
Changes in working capital:
Increase in inventory -21,725
Decrease in debtors 750
Decrease in creditors -13,000
Cash generated from operations 32,355

1. Cash receipts from customers

Debtors - opening balance 21,700
Sales (cash and credit) 485,300
Less: Debtors - closing balance -20,950
486,050

2. Cash paid to suppliers and employees

Cost of sales (485300 - 84630) 400,670
Inventory - opening balance -69,500
Inventory - closing balance 91,225
Creditors - opening balance 45,000
Creditors - closing balance -32,000
Payments to creditors 435,395
Cash expenses (Calculation 3) 18,300
453,695

3. Cash expenses
Disclosable expenses 28,400
Less: Non-cash items
Depreciation -4,250
Less: Separate items
Interest on mortgage loan -5,350
Interest on overdraft -500
18,300
Question 13.6

WES DEALERS
STATEMENT OF CASH FLOW
FOR THE YEAR ENDED 30 JUNE 20.11
20.11 20.11
Notes R R
Cash flow from operating activities
Cash receipts from customers (Calculation 1) 75,700
Cash paid to suppliers and employees (Calculation 2) -24,050
Cash generated from operations 1 51,650
Interest expense -2,750
Interest income 3,000
Dividende received 3,750
Net cash flow from operating activities 55,650

Cash flow from investing activities

Proceeds from fixed deposit 5,000
Investment in shares -6,000
Purchase of land and buildings -9,660
Purchase of vehicle -20,000
Proceeds from sale of equipment 1,310
Net cash flow from investing activities -29,350

Cash flow from financing activities

Proceeds from short-term loan 3,000
Proceeds from partner loan 5,000
Payment of short-term loan -2,000
Capital contributions from partners 15,000
Drawings by partners (Calculation 4) -35,500
Net cash flow from financing activities -14,500
Net increase in cash and cash equivalents 11,800
Cash and cash equivalents at beginning of period -4,600
Cash and cash equivalents at end of period 7,200

WES DEALERS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 20.11

1. Reconciliation of profit before tax with cash generated from operations

20.11
R
Profit before tax 31,500
Adjusted for:
Depreciation 6,850
Interest income -3,000
Interest expense 2,750
Gain on sale of asset -200
Loss on sale of asset 500
Dividends received -3,750
Operating profit before working capital changes 34,650
Working capital changes:
Increase in inventory -10,000
Decrease in debtors 7,000
Increase in creditors 20,000
Cash generated from operations 51,650

1. Cash receipts from customers

Debtors - opening balance 22,000
Sales (cash and credit) 68,900
Less: Credit losses -200
Less: Debtors - closing balance -15,000
75,700

2. Cash paid to suppliers and employees

Cost of sales -
Inventory - opening balance -50,000
Inventory - closing balance 60,000
Creditors - opening balance 18,000
Creditors - closing balance -38,000
Payments to creditors -10,000
Cash expenses (Calculation 3) 34,050
24,050

3. Cash expenses
Operating expenses 44,350
Less: Non-cash items
Loss on sale of asset -500
Depreciation -6,850
Credit losses -200
Less: Separate items
Interest on lease -800
Interest on overdraft -350
Interest on loan (Smit) -1,600
34,050

4. Drawings Smit Wesson

Opening balance 3,000 8,000
Interest on capital 4,750 5,500
Salary 4,000 6,000
Bonus - 1,500
Interest on current account 250 500
Profit-share 5,400 3,600
Closing balance 5,000 -12,000
22,400 13,100
Question 13.7

SOFAR INC
STATEMENT OF CASH FLOW
FOR THE YEAR ENDED 31 DECEMBER 20.11
20.11 20.11
Notes R R
Cash flow from operating activities
Cash receipts from customers (Calculation 1) 249,200
Cash paid to suppliers and employees (Calculation 2) -201,450
Cash generated from operations 1 47,750
Interest paid -7,500
Dividends received 4,250
Interest received 3,000
Net cash flow from operating activities 47,500

Cash flow from investing activities

Purchase of land and buildings (120000 - 100000) -20,000
Proceeds from sale of vehicle 7,000
Purchase of vehicles (32000 + 12000 - 30000) -14,000
Purchase of equipment (25000 - 21000) -4,000
Increase in fixed deposit (17000 - 15000) -2,000
Purchase of shares in ABC (13000 - 5000) -8,000
Net cash flow from investing activities -41,000

Cash flow from financing activities

Payment of mortage bond (62000 - 48000) -14,000
Net cash flow from financing activities -14,000
Net decrease in cash and cash equivalents -7,500
Cash and cash equivalents at beginning of period 2,000
Cash and cash equivalents at end of period -5,500
(500-6000) -5,500
SOFAR INC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 20.11

1. Reconciliation of profit before tax with cash generated from operations

20.11
R OR
Profit before taxation 47,650 47,650
Adjusted for:
Profit with sale of asset -1,000 -1,000
Depreciation 8,500 8,500
Credit losses (1250 - 875) 375 800
Interest paid 7,500 7,500
Dividends received -4,250 -4,250
Interest received -3,000 -3,000
Operating profit before changes in working capital 55,775 56,200
Working capital changes:
Increase in stock (40000 - 20000) -20,000 -20,000
Decrease in debtors (35875 - 26250) 9,625 9,200 ([25000 + 1250 + 425] - [35000 + 875])
Increase in creditors (47350 - 45000) 2,350 2,350
Cash generated from operations 47,750 47,750

1. Cash receipts from customers

Debtors - opening balance 35,000
Sales (cash and credit) (60000 × 100/25) 240,000
Less: Credit losses -800
Less: Debtors - closing balance -25,000
249,200
OR

Debtors - opening balance 35,000

Allowance for credit losses - opening balance (35000 × 2.5%) 875 35,875
Sales (cash and credit) (60000 × 100/25) 240,000
Less: Credit losses (1250 - 875 = 375 - 800) -425
Less: Debtors - closing balance -25,000
Allowance for credit losses - closing balance (25000 × 5%) -1,250 -26,250
249,200

2. Cash paid to suppliers and employees

Cost of sales (240000 - 60000) 180,000
Inventory - opening balance -20,000
Inventory - closing balance 40,000
Purchases 200,000
Creditors - opening balance 45,000
Creditors - closing balance -47,350
Payments to creditors 197,650
Cash expenses (Calculation 3) 3,800
201,450

3. Cash expenses
Operating expenses 20,600
Less: Non-cash items
Depreciation -8,500
Credit losses -800
Less: Separate items
Interest on mortgage -7,500
(Bank charges+Other expenses) 3,800
Chapter 13 Statement of cash flow

Question 13.8

ACFC (PTY) LTD

STATEMENT OF CASH FLOW
FOR THE YEAR ENDED 31 DECEMBER 20.11
20.11 20.11
Notes R R
Cash flow from operating activities
Cash receipts from customers (Calculation 1) 249,500
Cash paid to suppliers and employees (Calculation 2) -217,375
Cash generated from operations 1 32,125
Interest paid -5,200
Dividends received 775
Interest received 1,500
Dividends paid -5,760
Taxation paid (12740 - 12740) -
Net cash flow from operating activities 23,440

Cash flow from investing activities

Purchase of land and buildings - expansion (106000 - 96000) -10,000
Proceeds sale of equipment (3000 × 15% × 6/12 = 225; 5000 - 2000 - 225 = 2775 + 225 = 3000) 3,000
Purchase of shares (17700 - 12000) -5,700
Increase in fixed deposit (15000 - 5000) -10,000
Net cash flow from investing activities -22,700

Cash flow from financing activities

Pay instalments on new vehicle (replacement) (600 × 5) -3,000
Proceeds from issue of share capital (100000 - 90000) 10,000
Payment of mortage bond (60000 - 44260) -15,740
Net cash flow from financing activities -8,740
Net increase in cash and cash equivalents -8,000
Cash and cash equivalents at beginning of period 2,500
Cash and cash equivalents at end of period -5,500
(500 - 6000) -5,500
ACFC (PTY) LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 20.11

1. Reconciliation of profit before tax with cash generated from operations

20.11
R OR
Profit before tax 46,500 46,500
Adjusted for:
Profit with sale of equipment -225 -225
Loss with scrapping of vehicle 500 500
Depreciation 6,925 6,925
Allowance for credit losses (5500 - 6500) -1,000 500
Interest income -1,500 -1,500
Interest expense 5,200 5,200
Dividends received -775 -775
Changes in working capital:
Increase in inventory (40000 - 20000) -20,000 -20,000
Decrease in debtors (41500 - 30500) 11,000 9,500 ([25000 + 5500 + 1500] - [35000 + 6500])
Decrease in creditors (52000 - 17000 - 48500) -13,500 -13,500
Cash generated from operations 33,125 33,125

1. Cash receipts from customers

Debtors - opening balance 35,000
Sales (cash and credit) (60000 × 100/25) 240,000
Less: Credit losses -500
Less: Debtors - closing balance -25,000
249,500
OR

Debtors - opening balance 35,000

Allowance for credit losses - opening balance 6,500 41,500
Sales (cash and credit) (60000 × 100/25) 240,000
Less: Credit losses (5500 - 6500 = -1000-500) -1,500
Less: Debtors - closing balance -25,000
Allowance for credit losses - closing balance -5,500 -30,500
249,500

2. Cash paid to suppliers and employees

Cost of sales (60000 × 75/25) 180,000
Inventory - opening balance -20,000
Inventory - closing balance 40,000
Purchases 200,000
Creditors - opening balance 48,500
Creditors - closing balance (52000 - [20000 - (500 × 6) = 17000]) -35,000
Payments to creditors 213,500
Bank charges 2,000
Other operating expenses 1,875
217,375
Question 13.9

OPM INC
STATEMENT OF CASH FLOW
FOR THE YEAR ENDED 31 DECEMBER 20.11
20.11 20.11
Notes R R
Cash flow from operating activities
Cash receipts from customers (Calculation 1) 2,150,456
Cash paid to suppliers and employees (Calculation 2) -2,121,926
Cash generated from operations 1 28,530
Taxation paid -41,598
Interest paid -17,500
Dividends paid -5,000
Net cash flow from operating activities -35,568

Cash flow from investing activities

Investment in 30 day notice deposit -250,000
Purchase of land and buildings -
Purchase of vehicle -
Proceeds from sale of asset 10,000
Net cash flow from investing activities -240,000

Cash flow from financing activities

Proceeds from issue of share capital 350,000
Proceeds from long term loan 200,000
Net cash flow from financing activities 550,000
Net increase in cash and cash equivalents 274,432
Cash and cash equivalents at beginning of period -132,095
Cash and cash equivalents at end of period 142,337
(500 + 149337 - 17500 + 10000) 142,337

OPM INC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 20.11

1. Reconciliation of profit before tax with cash generated from operations

20.11
R
Profit before tax 167,065
Adjusted for:
Depreciation 49,000
Increase in allowance for credit losses (3000 - 2500) 500
Profit on sale of asset -5,000
Interest expense 17,500
Dividends received
Changes in working capital:
Increase in debtors (105000 - 60000) -45,000
Increase in inventory (85000 - 65000) -20,000
Decrease in creditors (21275 - 156810) -135,535
Cash generated from operations 28,530

1. Cash receipts from customers

Debtors - opening balance 60,000
Sales (cash and credit) (550000 × 100/25) 2,200,000
Less: Credit losses -4,544
Less: Debtors - closing balance -105,000
2,150,456

2. Cash paid to suppliers and employees

Cost of sales (2200000 - 550000) 1,650,000
Inventory - opening balance -65,000
Inventory - closing balance 85,000
Purchases 1,670,000
Creditors - opening balance 156,810
Creditors - closing balance -21,275
Payments to creditors 1,805,535
Bank charges (10376 - 500) 9,876
Administration expenses 1,595
Operating lease 36,000
Rates and taxes 12,696
Electricity and water 15,204
Auditor's remuneration 5,500
Distribution costs 10,672
Accounting fees 60,000
Salaries 164,848
2,121,926

Profit before tax

Sales 2,200,000
Cost of sales -1,650,000
Gross profit 550,000
Administration expenses -10,376
Bank charges -1,595
Operating lease -36,000
Rates and taxes -12,696
Electricity and water -15,204
Auditor's remuneration -5,500
Distribution costs -10,672
Depreciation -49,000
Credit losses -4,544
Accounting fees -60,000
Profit on sale of asset (25000 - 20000 - 10000) 5,000
Interest expense (200000 × 15% × 7/12) -17,500
Salaries -164,848
Profit before tax 167,065
Taxation -41,598
Profit after tax 125,467
Question 13.10

OPM MANUFACTURERS (PTY) LTD

STATEMENT OF CASH FLOW
FOR THE YEAR ENDED 31 DECEMBER 20.11
20.11 20.11
Notes R R
Cash flow from operating activities
Cash receipts from customers (Calculation 1) 450,576
Cash paid to suppliers and employees (Calculation 2) -429,309
Cash generated from operations 1 21,267
Taxation paid -23,125
Dividends paid* (8000 + 7000 - 7000) -8,000
Net cash flow from operating activities -9,858

Cash flow from investing activities

Purchase of equipment -75,000
Purchase of land and buildings -280,000
Purchase of vehicle -95,000
Proceeds from sale of asset 11,500
Net cash flow from investing activities -438,500

Cash flow from financing activities

Proceeds from issue of share capital 444,467
Net cash flow from financing activities 444,467
Net increase in cash and cash equivalents -3,891
Cash and cash equivalents at beginning of period -
Cash and cash equivalents at end of period -3,891
(-16191 + 300 + 11500 + 500) -3,891

OPM MANUFACTURERS (PTY) LTD

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 20.11

1. Reconciliation of profit before tax with cash generated from operations

20.11
R
Profit before tax 53,092
Adjusted for:
Depreciation 24,500
Increase in allowance for credit losses 1,900
Loss on sale of asset 2,000
Interest expense -
Dividends received -
Changes in working capital:
Increase in debtors -43,500
Increase in inventory -78,000
Increase in creditors 61,275
Cash generated from operations 21,267

1. Cash receipts from customers

Debtors - opening balance -
Sales (cash and credit) (174111 × 100/35) 497,460
Less: Credit losses (384 + 3000) -3,384
Less: Debtors - closing balance -43,500
450,576

2. Cash paid to suppliers and employees

Cost of sales (497460 - 174111) 323,349
Inventory - opening balance -
Inventory - closing balance 78,000
Purchases 401,349
Creditors - opening balance -
Creditors - closing balance -61,275
Payments to creditors 340,074
Salaries 64,848
Municipal taxes 3,592
Electricity and water 6,109
Distribution cost 1,870
Administration expenses (4621 - 1900) 2,721
Bank charges 595
Auditor's remuneration 1,500
Operating lease payments 8,000
429,309

Profit before tax

Sales 497,460
Cost of sales -323,349
Gross profit 174,111
Salaries -64,848
Municipal taxes -3,592
Electricity and water -6,109
Distribution cost -1,870
Administration expenses -4,621
Credit losses (384 + 3000) -3,384
Bank charges -595
Auditor's remuneration -1,500
Operating lease -8,000
Depreciation (9500 + 15000) -24,500
Loss on sale of vehicle (15000 - 1500 - 11500) -2,000
Profit before tax 53,092
Taxation -23,125
Profit after tax 29,967
Question 13.11

OPM INC
STATEMENT OF CASH FLOW
FOR THE YEAR ENDED 31 DECEMBER 20.11

20.11 20.11
Notes R R
Cash flow from operating activities
Cash receipts from customers (Calculation 1) 1,111,112
Cash paid to suppliers and employees (Calculation 2) -1,013,944
Cash generated from operations 1 97,168
Taxation paid -38,500
Dividends paid (500000/2.50 × 0.05) -10,000
Net cash flow from operating activities 48,668

Cash flow from investing activities

Purchase of equipment -150,000
Purchase of land and buildings -300,000
Purchase of vehicle -160,000
Investments made -50,000
Net cash flow from investing activities -660,000

Cash flow from financing activities

Proceeds from issue of share capital 600,000
Net cash flow from financing activities 600,000
Net increase in cash and cash equivalents -11,332
Cash and cash equivalents at beginning of period -
Cash and cash equivalents at end of period -11,332
(-1832 + 500 - 10000) -11,332

OPM INC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 20.11

1. Reconciliation of profit before tax with cash generated from operations

20.11
R
Profit before tax 167,065
Adjusted for:
Depreciation 43,000
Increase in allowance for credit losses 2,500
Changes in working capital:
Increase in debtors -85,000
Increase in inventory -70,000
Increase in creditors 39,603
Cash generated from operations 97,168

1. Cash receipts from customers

Debtors - opening balance -
Sales (cash and credit) 1,200,000
Less: Credit losses -3,888
Less: Debtors - closing balance -85,000
1,111,112

2. Cash paid to suppliers and employees

Inventory - opening balance -
Inventory - closing balance 70,000
Creditors - opening balance -
Creditors - closing balance -39,603
Expenses (1200000 - 167065 - 43000 - 2500) 983,547
1,013,944