Explain the composition of cash and cash equivalents

Reference no: EM133081102

CASHFLOW QUESTION

Foryoubaby manufactures and distributes a range of educational products for babies and toddlers. Selected financial statements of Foryoubaby Ltd prepared for internal management purposes are provided below.

Additional information

During the year, Foryoubaby Ltd entered into the following transactions relevant to the preparation of the statement of cash flows:

(a) New equipment was purchased at a cost of $250 000; $150 000 was paid in cash and the balance covered using the company's existing debt facilities.

(b) Equipment with a cost of $120 000 and accumulated depreciation of $105,000 was sold for $94,000 cash.

(d) Debentures (9%) were issued at nominal value for cash, $200 000.

(e) An additional 40 000 ordinary shares were issued for cash at $6 per share.

(f) The bank overdraft facility is used as part of the company's everyday cash management facilities.

(g) Repayments of loan principal amounting to $20 000 were made during the year.

Required
A. Prepare a statement of cash flows in accordance with AASB 107 using the direct method of presentation.

B. Prepare notes as follows: (a) explain the composition of cash and cash equivalents using relevant accounts included in the statement of financial position; and (b) reconcile the net cash from operating activities to profit after tax.

C. Comment on the company's cash flows during the year ended 30 June 2017 and cash position at 30 June 2017.

Reference no: EM133081102

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