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Cash flows

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Cash flows

  • This topic has 4 replies, 2 voices, and was last updated 1 year ago by Aleezah.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • September 14, 2023 at 9:19 am #692015
    Aleezah
    Participant
    • Topics: 7
    • Replies: 7
    • ☆

    Q. Kiran Co had the following balances in its statement of financial position as at 30 June 20X5 and 20X4:

    20X5

    20X4

    Current liabilities

    $

    $

    Taxation payable

    400

    2,500

    Dividends (declared before the year-end)

    800 3,300

    Non-current liabilities

    50,000

    40,000

    8% Loan notes

    85,500

    Equity

    In the year ended 30 June 20X5, income tax of $550 was paid. The

    45,500

    additional loan notes were issued on 30 June 20X5. What was Kiran Co’s profit before tax for the year ended 30 June

    20X5?

    >>> Sir the answer is : $44,250
    I cannot understand how do we find the profit before tax here. I’ve watched your lectures sir please help me.

    September 14, 2023 at 4:50 pm #692030
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    Are you sure that you have typed up everything in the question?

    I ask because there is no mention of any current or non-current assets. Also you have a heading ‘equity’ but no number below it.

    September 14, 2023 at 6:06 pm #692033
    Aleezah
    Participant
    • Topics: 7
    • Replies: 7
    • ☆

    Q. Kiran Co had the following balances in its statement of financial position as at 30 June 20X5 and 20X4:

    20X5 20X4
    Current liabilities: $ $

    Taxation payable 800 400

    Dividends (declared before the year-end) 3300 2500

    Non-current liabilities:

    8% Loan notes 50,000 40,000

    Equity 85,500 45.500

    In the year ended 30 June 20X5, income tax of $550 was paid. The additional loan notes were issued on 30 June 20X5. What was Kiran Co’s profit before tax for the year ended 30 June 20X5?

    >>Sorry sir, i typed the question again. Hope it is proper clear now i have typed everything given in the question. I am having difficulty finding the profit before tax using the cash flow related topics given as in this question.

    September 15, 2023 at 5:06 pm #692086
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    Now I can explain 🙂 (Although this is not a cash flow question).

    The equity increased by 40,000, and since there is no mention of any new shares being issued it must mean that the retained earnings increased by 40,000.

    This increase will be the profit after tax and after dividends.

    The tax charge for the year was 800 + 550 – 400 = 950.
    The dividends declared for this year were 3,300.
    Therefore the profit before tax and dividends must have been 40,000 + 950 + 3,300 = 44,250

    September 15, 2023 at 5:18 pm #692090
    Aleezah
    Participant
    • Topics: 7
    • Replies: 7
    • ☆

    OHH I GOT IT NOW sir thank you so much for explaining!!! whenever I’m in stress while solving questions you help me out !! I’m so grateful for your help !! thank you sm for your hard work!!! sir 😀 o7 (salute emoji)

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