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how to solve this?cash flow direct method

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › how to solve this?cash flow direct method

  • This topic has 5 replies, 2 voices, and was last updated 7 years ago by MikeLittle.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • December 4, 2015 at 1:32 am #287388
    for8verlik
    Member
    • Topics: 17
    • Replies: 25
    • ☆

    Revenue $ 560,000, mark up % 33.33%, closing inventory $80,000 (an increase of 100% compared with the opening inventory), payables b/f $ 79,000, payables carried forward $160,000, receiveables b/f $62,000, receivabales c/f $59,500, bad debts written off during the year $ 3,500, allowance for receivables b/f $8,620,allowance for receivables c/f $ 15,200

    how much cash was paid to the suppliers/payables in the year?

    sorry, i totally have no idea how to approach this ‘mega question’.
    any help would be much appreciated

    December 4, 2015 at 8:40 am #287442
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22699
    • ☆☆☆☆☆

    The extent of knowledge required about direct method cash flows is illustrated in the free course notes where there is a quick example.

    Trust me here, there is no need to go further in to the topic than the illustration in those notes

    December 4, 2015 at 9:15 am #287466
    for8verlik
    Member
    • Topics: 17
    • Replies: 25
    • ☆

    answers:
    a) 569000
    b) 407000
    c) 379000
    d) 541000

    working:
    payable b/f= 79000

    cost + profit = selling price
    cost (100) + profit (33.33) = selling price (133.33)
    profit = 560,000 * 33.33/133.33= 140000
    cost = 560000-140000=420,000

    closing inventory 80,000
    increased 100%, thus 40,000

    total purchase 460,000

    credit side t balance 79,000+460,000=539,000

    debit side c/f = 160,000
    thus cash = $539000-$160,000=$379,000 (c)
    am i right? so ignore the bad debts as it is for receivables calculation right

    December 4, 2015 at 5:50 pm #287619
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22699
    • ☆☆☆☆☆

    I’m not wasting my time answering this! I’ve already told you, it won’t come up!

    December 4, 2015 at 6:07 pm #287627
    for8verlik
    Member
    • Topics: 17
    • Replies: 25
    • ☆

    ok i will drop this part then =D

    December 4, 2015 at 8:10 pm #287649
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22699
    • ☆☆☆☆☆

    Good thinking!

  • Author
    Posts
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