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Constructo Ltd Cash Flow Statement 2024

Constructo Ltd, a construction company based in Polokwane, is preparing its financial reports for the year ending 30 September 2024. The document includes a detailed statement of financial position, highlighting significant increases in assets, equity, and liabilities compared to the previous year, along with additional information regarding dividends, depreciation, cost of sales, operating profit, and income tax expense. The task requires the preparation of a statement of cash flows using the direct method in compliance with IAS 7.

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Sindisiwe Ndlovu
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2 views3 pages

Constructo Ltd Cash Flow Statement 2024

Constructo Ltd, a construction company based in Polokwane, is preparing its financial reports for the year ending 30 September 2024. The document includes a detailed statement of financial position, highlighting significant increases in assets, equity, and liabilities compared to the previous year, along with additional information regarding dividends, depreciation, cost of sales, operating profit, and income tax expense. The task requires the preparation of a statement of cash flows using the direct method in compliance with IAS 7.

Uploaded by

Sindisiwe Ndlovu
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

CLASS EXAMPLE – DIRECT METHOD [30 MARKS – 45 MINUTES]

Constructo Ltd is a company in the construction industry. It is based in Polokwane and


has a 30 September financial year-end.
The company is busy with the financial reports for the 2024 financial year. You are
provided with the following information for the year ended 30 September 2024:

Constructo Ltd 2024 2023

Statement of financial position as at 30 September 2024 Notes R R

Assets

Property, plant and equipment at cost 2 1 645 500 1 200 000

Accumulated depreciation – Property, plant and equipment 2 (384 000) (120 000)

Non-current assets 1 261 500 1 080 000

Current Assets

Inventory 1 951 918 1 644 418

Accounts receivable 7 2 340 000 1 932 000

Prepaid expenses 54 000 69 000

Cash on hand 180 000 15 000

Bank 0 258 000

Current assets 4 593 918 3 918 418

Total assets 5 787 418 4 998 418

Equity and liabilities

Equity

Stated Capital 1 575 000 1 350 000

Retained earnings 2 652 418 1 302 418

4 227 418 2 652 418

Non-Current liabilities

Long-term borrowings 6 216 000 546 000

216 000 546 000


Current liabilities

Trade payables 549 000 840 000

Accrued expenses 78 000 30 000

Bank 102 000 0

Shareholders for dividend 1 165 000 60 000

SARS - Income tax payable 5 450 000 870 000

Total current liabilities 1 344 000 1 800 000

Total liabilities 1 560 000 2 346 000

Total equity and liabilities 5 787 418 4 998 418

Additional information:
1. The directors of Constructo Ltd declared dividends amounting to R 240 000 to
ordinary shareholders during the year ended 30 September 2024.
2. The total depreciation for the year ended 30 September 2024 was correctly
computed and amounted to R 264 000. No items of property, plant and equipment
were sold during the financial year ending 30 September 2024. The company did
however purchase a new motor vehicle as part of its expansion plans.
3. Constructo Ltd reported an amount of cost of sales worth R 3 720 000 and a gross
profit amounting to R 4 680 000 during the financial year ended 30 September
2024.
4. Operating profit amounted to R 2 306 700 for the financial year ended 30
September 2024.
5. The income tax expense correctly computed for the financial year ended 30
September 2024 amounted to R 630 000.
6. Interest paid on the long-term loan amounted to R 86 700. There was no accrued
interest at year-end.
7. Constructo Ltd maintains an allowance for expected credit losses at 10% of
receivables. The accounts receivable balance presented in the statement of
financial position is shown net of the allowance for expected credit losses.
8. Ignore any VAT implications
YOU ARE REQUIRED TO: MARKS
a) Prepare the statement of cash flows for Constructo Ltd for the year [30]
ended 30 September 2024, using the DIRECT METHOD. The
statement of cash flows must comply with IAS 7.
Note:
− Show all calculations. Marks will be awarded for
presentation and format.

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