statement of cash flow

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May 26, 2016 at 3:05 pm #317220
adarsh1997
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Dear sir,
I have some difficulty to tackle the following problem
Purchases from suppliers were $18500, of which $2550 was unpaid at the end of the year. Brought forward payables were $1000.
I have done 18500+2550-1000=20050.
However in the kit the answer is 1000+18500-2550=16950
Could you explain why so?????
Thanks in advance.
May 26, 2016 at 5:34 pm #317277
John Moffat
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They owed 1,000 at the start of the year.
They bought more for 18,500.
So they were then owing 19,500.
They only owed 2,550 at the end of the year.
So they must have paid cash of 19,500 – 2,550 = 16,950
Have you watched our free lectures (not just the ones on Statement of cash flows, but all of the earlier ones)? If you watch them in order then they are a complete free course for Paper F3.
May 27, 2016 at 6:07 am #317398
adarsh1997
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$2550 is unpaid which means it is a due. Why have you minus it?
And by the way, if we draw a T ledger to represent the information, what would appear on the debit and credit side?
May 27, 2016 at 8:16 am #317427
John Moffat
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Because it has not been paid!
Therefore only the balance of the 19,500 has been actually paid, and it is only the cash paid that we are wanting.
Drawing a t-account for this would be wasting time 🙂
Have you watched all of our free lectures?
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