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Sun Ltd had the following balances in its accounts at 30 April 2016 and 30 April 2017.
30 April 2016 -$
Cash in hand= 1,000
Bank O/D= 41,627
Cash at bank= Nil
Longterm bank loan= 50,00030 April 2017 -$
Cash in hand= 1,100
Bank O/D= Nil
Cash at bank= 21,932
Longterm bank loan= 25,000As per IAS 7 SCF, What amount should be shown under net change in cash and cash equivalents in Sun’s statement of cashflows for the year ended 30 April 2017?
Answer is = $63,659 increase
please explain how can i arrive to this answer?
Ignore the long term loan because it doesn’t fit into the definition of “cash and cash equivalents” – it’s not a liquid matter nor convertible into liquid within 3 months
That leaves us with an increase in cash in hand of $100 and an improvement in the bank balance from $41,627 overdrawn to $21,932 positive – that’s a change of $63,559 improvement
Add that to the $100 improvement in the cash in hand figure and you arrive at $63,659
OK?
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