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QUESTION 25
A company made a profit of $300,000 for the year after charging depreciation of $38,000.
During the year it paid off a loan of $75,000, made payments for fixed assets totalling
$80,000, issued shares for $100,000 and had an increase in inventories of $8,000.
What will be the increase in cash and bank balances at the end of the year?
A$291,000
B $199,000
C$75,000
D $75,000given solution is
ANSWER 25
C
$
Profit for the year 300,000
+ Depreciation charges 38,000
íIncrease in inventory (8,000)
íPayments for non current assets (80,000)
+ Issue of shares 100,000
_______
Increase in cash and bank 275,000is the above soution right?
I get it to $275,000 but your copying of the answer appears incorrect – both answers “C” and “D” according to you are $75,000
Unless John Moffat can say different, I think the answer is $275,000 net positive flow
I get $275,000 as well 🙂
Either you have typed the choices of answers wrong, or there is a typing error in whichever book you got this question from.
🙂 yaeh thats why i pasted the question here, bec i also got the same answer like u got n that is 275000, but was so confused y it is not there in options. Anyways thanks a lot.
Ref ONline CBE DEMO at Opentuition:
Q.15: Bob acquired 80% of the voting equity shares of Bill. Bill had the following equity at the date of acquisition:
$ Ordinary shares $1 1,000,000
Retained earnings 800,000
The cost of the investment was $1,500,000 and the fair value of the non-controlling interest at acquisition was $360,000.
What was the goodwill on acquisition of Billl?My Answer is 60,000. Is that right answe
Ref of CBE DEMO qtn 23: The plant and machinery account (at cost) of a business for the year ended 31 December 20X5 was as follows
Plant and machinery (at cost)
20X5 1 Jan Balance 240,000
20X5 31 Mar Transfer disposal account 60,000
20X5 30 Jun Cash purchase of plant 160,000
20X5 31 Dec Balance 340,000
The company’s policy is to charge depreciation at 20% per year on the straight-line basis, with proportionate depreciation in the years of purchase and disposal.Kindly explain the solution.
You can do it several different ways (which obviously all give the same answer!).
Here is one way:From 1 Jan to 31 March the cost was 240,000.
So the depreciation for these 3 months is 20% x 3/12 x 240,000Then cost falls to 240,000-60,000 = 180,000 and stays at this figure from 1 April to 30 June
So the depreciation for these 3 months is 20% x 3/12 x 180,000Then cost goes up to 180,000+160,000 = 340,000 and stays at this figure from 1 July to 31 December.
So the depreciation for these 6 months is 20% x 6/12 x 340,000If you calculate those three figures and add them together then you will have the total depreciation for the year.
QUESTION 1
Which of the items listed below could appear in a company’s statement of cash flows?
(i) Dividends received.
(ii) Bonus issue.
(iii) Irrecoverable debts written off.
(iv) Profit on sale of a fixed asset.
(v) Repayment of loanA (i), (ii) and (iv)
B(i), (ii) and (iii)
C(i) and (iv)
D(i) and (v)bec proceeds on non-current assets are included in statement of cash flow from investing activities..The answer written is D, where (iv) is not included.
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