QUESTION 3 22 MARKS (40 MINUTES)

Ignore VAT and dividend withholding tax and deferred tax on any items of other
comprehensive income.

LRN (Pty) Ltd is a company that was incorporated in 2000. The company has gone from strength to
strength and you, the accountant, are busy preparing the statement of cashflow for the year ended
30 June 2024. The following financial statements already prepared are relevant:

LRN (Pty) Ltd

Statement of financial position at 30 June 2024

2024 2023
R R
ASSETS

Non-current assets
Land and buildings 196 000 120 000
Plant and equipment 312 400 192 000

Current assets
Trade receivables 122 900 147 620
Inventory 192 000 181 880
Prepaid expenses 15 600 9 800
Current tax receivable - 38 380
Bank 92 300 50 440
931 200 740 120

EQUITY AND LIABILITIES

Equity
Share capital 180 000 100 000
Retained earnings 377 080 321 540
Revaluation surplus 90 000 50 000

Non-current liabilities
Long-term loans 115 740 42 800
Deferred taxation 20 000 10 000

Current liabilities
12% Debentures - 50 000
Trade payables 91 000 147 780
Current tax payable 33 380 -
Shareholders for dividends 24 000 18 000
931 200 740 120

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LRN (Pty) Ltd

Extract from the statement of profit or loss and other comprehensive income for the year
ended 30 June 2024

2024
R
Sales revenue 1 411 000
Cost of sales (756 000)
Gross profit 655 000
Other costs (306 560)
Finance costs (21 000)
Profit before tax 327 440
Taxation expense (122 720)
Profit for the year 204 720
Other comprehensive income for the year
Revaluation of land and buildings 40 000
Total comprehensive income for the year 244 720

LRN (Pty) Ltd

Extract from the statement of changes in equity for the year ended 30 June 2024

Retained
earnings
2024
R
Balance at 1 July 2023 321 540
Profit for the year 204 720
Dividends paid (109 180)
Rights issue (40 000)
Balance at 30 June 2024 377 080

Additional information

1. The 12% debentures were repaid on 31 December 2023.

2. Two provisional tax payments for the year ending 30 June 2024 were made during the year
totalling R12 000.

3. Included in trade receivables in 2024 is an allowance for credit losses of R10 000 (2023: Rnil).
In addition to this, other costs also include an actual bad debt of R8 500 written off during the
year.

4. Land and buildings were revalued on 31 March 2024 by R40 000. Ignore deferred tax on other
comprehensive income.

5. Total depreciation on all the plant and equipment for the year amounted to R44 000.
Depreciation is included in ‘other costs’. One item of plant, with an original cost price of
R82 000 and accumulated depreciation of R62 000, was traded in at a loss of R15 000, in part
payment of a new replacement machine costing R121 000. Finance cost of R5 500 was
capitalised during the year.

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6. On 23 November 2023, the company made a rights issue of 10 000 shares. These 10 000
shares had a total market value of R80 000 on this date. Each share was offered at R4 a
share and all the rights were taken up.

7. The following amounts were already correctly calculated for the statement of cashflow for
30 June 2024:

 Dividends paid: R103 180

8. Dividends and interest paid are classified as part if operating activities.

REQUIRED:

Prepare the statement of cashflows of LRN (Pty) Ltd for the year ended 30 June 2024 in terms of
IAS 7 Statement of cashflows, using the direct method. Comparative figures are not required. (22)

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