1. Question 19 (35 marks)
The management of Lizard Ltd. require you to prepare a statement of cash flows for their
business for the year ended 30 June 2010.
Lizard Limited
Balance Sheet
30th June 30th June
2010 2009
$ $
Current Assets
Cash holdings 21,000 45,000
Inventories 173,000 188,000
Receivables 120,000 119,000
Short-term deposits 40,000 65,000
Total Current Assets 354,000 417,000
Non-Current Assets
Investments 650,000 750,000
Property, plant and equipment 2,003,000 1 550,000
Total Non-Current Assets 2,653,000 2,300,000
Total Assets 3,007,000 2,717,000
Current Liabilities
Accounts payable 104,000 82,000
Income tax payable 192,000 136,000
Total Current Liabilities 296,000 218,000
Non-Current Liabilities
Borrowings 300,000 180,000
Total Non-Current Liabilities 300,000 180,000
Total Liabilities 596,000 398,000
Net Assets 2,411,000 2,319,000
Equity
Share capital 2,000,000 1 900,000
General reserve 300,000 250,000
Retained earnings 111,000 169,000
2,411,000 2,319,000
Lizard Limited
Extract to the Notes to the financial statements 2010 2009
Property, plant and equipment
Land, at cost 900,000 900,000
Plant and equipment, at cost 1,290,000 795,000
Accumulated depreciation of plant and equipment 187,000 145,000
1,103,000 650,000
Property, plant and equipment, book value 2,003,000 1,550,000
An item of plant originally purchased for $65,000 and with a book value of $12,000 was sold
during the year for cash.

2. Lizard Ltd
Income statement
for the year ended 30 June 2010
$
Sales 2,850,000
Less cost of sales 1,340,000
Gross profit 1,510,000
Add interest revenue 2,400
Gain on sale of plant and equipment 8,000
Dividends received 24,000
1,544,400
Less interest expense 18,750
Other expenses 670,300
Profit before tax 855,350
Less income tax expense 192,000
Profit for the year 663,350
Other information:
Income tax provided on 30 June 2009 was paid during the year.
The change in borrowings during the year was due to an issue of debentures.
It is company policy that the purchase and sale of all non-current assets be for cash.
Prepare a Statement of cash flows for Lizard Ltd. for the year ended 30 June 2010. (35 marks)
Workings:

3. Workings:

4. Lizard Ltd
Statement of cash flows
for the year ended 30 June 2010
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

5. SOLUTIONS
Question 19 (35 marks)
Lizard Ltd
Statement of cash flows
for the year ended 30 June 2010
$ $ Marks
Cash flows from operating activities
Receipts from customers 2,849,000 3
Payments to suppliers and employees (1,878,300) 11
Income tax paid (136,000) 1
Interest paid (18,750) 1
Net cash from operating activities 815,950
Cash flows from investing activities
Interest received 2,400 1
Dividends received 24,000 1
Sale of investments 100,000 1
Proceeds from disposal 20,000 2
Payments for property,plant and equipment (560,000) 3
(413,600)
Cash flows from financing activities
Issue of debentures 120,000 1
Additional share capital 100,000 1
Dividends paid (671,350) 4
(451,350)
Net cash decrease for period (49,000) 1
Cash and cash equivalents at start 110,000 2
Cash and cash equivalents at end $61,000 2
Total 35
Marking:
Award the marks shown in the final column for numerical accuracy. Amounts which require
calculation are worth more than one mark.
The exact marks breakdown can be viewed in the items on the next page. If numerical
calculations are correct but the item is misclassified, then deduct 1 mark, up to a maximum
of 2 marks.

6. Item 1 (3 marks)
Calculating cash receipts Marks
Opening balance 119,000
Add credit sales 2,850,000 1
Less accounts received ???
Closing balance 2,969,000
Therefore cash received from customers is $2,849,000 1
Opening and closing balance 1
Total 3
Item 2 (11 marks)
Payments to suppliers and Marks
employees
Calculating Purchases
Closing inventory 173,000
Add cost of sales 1,340,000 1
Less opening inventory 188,000
Purchases 1,325,000 1
Opening and closing inventory 1
Total 3
Calculate Cash Payments Marks
Opening accounts payable balance 82,000
Add purchases 1,325,000 1
Less closing accounts payable balance 104,000
1,303,000 1
Opening and closing balance 1
Total 3
Schedule of Payments to Suppliers Marks
and Employees
Payments to suppliers 1,303,000 1
Other expenses 670,300 1
Less depreciation 95,000* 3
1,878,300
Total 5
* (65,000 – 12,000) + (187,000 – 145,000) = 53,000 + 42,000 =95,000
(1) (1) (1)

7. Item 3 (2 marks)
Proceeds from Disposal Marks
Book value 12,000 1
Add gain on sale 8,000 1
Proceeds from disposal 20,000
Total 2
Item 4 (3 marks)
Plant and equipment Marks
Opening balance 795,000
Less sale of equipment 65,000 1
Acquisition of new plant and ???
equipment
Closing balance 1,290,000
Therefore new equipment acquired = $560,000 1
Opening and closing balance 1
Total 3
Item 5 (4 marks)
Retained earnings Marks
Opening balance 169,000
Add profit 663,350 1
Less general reserve 50,000 1
Less dividends ???
Closing balance 111,000
Dividends paid must therefore be $671,350 1
Opening and closing balance 1
Total 4
Item 6 (2 marks)
Cash and cash equivalents at start Marks
Cash 45,000 1
Add short-term deposits 65,000 1
110,000
Total 2
Item 7 (2 marks)
Cash and cash equivalents at end Marks
Cash 21,000 1
Add short-term deposits 40,000 1
61,000

8. Total 2