Prepare a statement of cash flows

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Reference no: EM133044794

Question - The most recent statement of financial position and statement of profit or loss for Star Ltd are set out below.

Statement of financial position as at 31 December

2020

2019

Assets

£'000

£'000

Non-current assets

 

 

Property, plant, and equipment

15,010

15,025

Current Assets Inventories

1,670

1,480

Trade receivables

980

840

Cash at bank

290

120

 

2,940

2,440

Total assets

17,950

17,465

Equity and liabilities

 

 

Equity

 

 

Ordinary shares at £0.5 each

5,900

2,900

Share premium

5,400

3,900

Retained earnings

2,030

1,145

Total equity

13,330

7,945

Non-current liabilities

 

 

Interest bearing borrowings

2,730

7,390

Current liabilities

 

 

Trade and other payables (Note 1)

1,010

1,380

Tax liabilities

880

750

 

1,890

2,130

Total liabilities

4,620

9,520

Total equity and liabilities

17,950

17,465

 

Statement of profit or loss for the year ended 31 December 2020

 

£'000

Sales Revenue

15,990

Cost of Sales

(10,010)

Gross profit

5,980

Distribution costs

(1,110)

Administrative expenses

(1,980)

Profit from operations

2,890

Finance costs

(590)

Profit before tax

2,300

Tax

(925)

Profit for the year

1,375

Additional information:

1. Trade and other payables comprise:

 

2020 £'000

2019 £'000

Trade payables

690

790

Interest payable

320

590

 

1,010

1,380

2. A dividend was paid during the year of £490,000.

3. The total depreciation charge for the year was £1,881,000.

4. Plant disposed of in the year had a carrying value of £29,800, and cash received for the disposal of the plant was £59,600.

Required -

(a) Explain how interest expense is accounted for in the cash flow and why?

(b) Prepare a statement of cash flows in accordance with IAS 7 as at 31 December 2020 using the indirect method.

Reference no: EM133044794

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