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EXAMPLE 1 i
‘A company’s statement of comprehensive income for the year to 81 March 2020 Is shown
below. The company's statement of financial position as at that date (with comparative
figures for 2019) is also shown.
‘Statement of comprehensive income for the year to 31 March 2020
£000
752
Sales
Cost of sales (387)
Gross profit 365
‘Administrative and selling expenses (228)
Interest payable - (18)
Dividends received 22
Profit before tax - 144
Taxation (28)
Profit after tax M6
of financial position at 31 March 2020
2020 2019
£000 £000
488 470
250 250
738 720
231 212
140 187
15 386 369
4124 41,089
220 200
70 60
531 445
821 705
Non-current liabilities
Long-term loans 90 130
Current liabilities
Trade payables 182 176
Accrued interest payable 3 :
| Taxation 28 55
= Bank overdraft 213 23254
1124 1,089
§ The following information is also available:
' (a) Administrative and selling expenses include employee salaries of £148,000 and
‘equipment depreciation of £70,000.
(b) There were no non-current asset disposals during the year to 31 March 2020.
() A dividend of £30,000 was paid in June 2019.
Required:
Prepare the company’s statement of cash flows for the year to 31 March 2020 (using the
indirect method). Also demonstrate that use of the direct method would give the same
fiaure for cash generated from operations as is given by the indirect method.
