The following are extracts from the Statement of Comprehensive Income of Lilliput’s Travels CC as well as the Statement of Financial Position of Lilliput’s Travels CC for the financial year ended 30 June 2022:
Statement of Financial Position as at 30 June 2022
ASSETS
2022
2021
R
R
Non-current assets
4 703 500
6 149 200
Land at cost
0
1 500 000
Vehicles (carrying value)
2 250 000
2 350 500
Furniture (carrying value)
1 253 500
1 398 700
Investment: Fixed deposit 7% p.a.
1 200 000
900 000
Current assets
2 723 000
1 862 600
Inventory
1 328 000
814 100
Trade receivables
1 395 000
965 500
Cash and cash equivalents
-
83 000
Total assets
7 426 500
8 011 800
EQUITY AND LIABILITIES
Members’ interest
5 486 000
4 990 100
Members’ contributions
4 163 000
3 255 100
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Retained earnings (Note 1)
1 323 000
1 735 000
Total equity
5 486 000
4 990 100
Non-current liabilities
1 000 500
925 000
Long-term loans from members
1 000 500
925 000
Current Liabilities
940 000
2 096 700
Trade payables
348 000
1 337 000
Distributions to members payable
279 000
362 000
Income tax payable
237 000
397 700
Bank overdraft
76 000
-
Total liabilities
1 940 500
3 021 700
Total equity and liabilities
7 426 500
8 011 800
An extract of the Statement of Comprehensive Income for the year ending 30 June 2022:
R
Profit before taxation
1 345 600
Income tax expense for the year
(376 768)
Net profit for the period
968 832
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Note 1 Retained earnings
R
Balance as at 1 July 2021
1 735 000
Net profit for the period
968 832
Distributions to members for the year (declared)
(1 380 832)
Balance as at 30 June 2022
1 323 000
Additional information of transactions that occurred during the financial year and which were correctly accounted for:
The members of Lilliput’s Travels CC are satisfied with the interest return the entity received from their fixed deposit and thus decided to invest more on 1 March 2022. All investment and interest transactions were completed in cash.
The only change in the loans from members was an additional loan amount provided by a member on 1 January 2022.
The loans from the members bear interest at a rate of 12% per annum. Interest for the 2022 financial year was paid in cash to the members.
The following gains were made during the financial year. See further information in bullets below:
o Gain on sale of land R330 000
o Gain on sale of a travel minibus R45 000
The only land owned by Lilliput’s Travels CC was sold during the financial year.
During the financial year, a travel minibus with a carrying value of R435 000 was sold in order to replace it with a new, more fuel-efficient bus. One of the members decided to contribute this new travel minibus from his personal capacity to the close corporation(“CC”) at a cost of R755 000. The transaction was recorded as a
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capital contribution in the accounting records of the CC. This was the only addition and disposal of vehicles for the financial year.
Furniture with a carrying amount of R 30 000 was disposed of for R25 000, whereas one new item of furniture was purchased during the financial year. There were no other purchases or disposals of furniture. A leak in one of the water pipes caused certain furniture to be damaged. It was thus decided to impair the furniture by R25 000. Depreciation of all furniture during the financial year (including that of the furniture disposed and purchased) totaled R180 200.
There were no other transactions affecting property, plant, and equipment during the financial year other than those mentioned above. All assets have a zero residual value.
The accounting policy is to measure and disclose all land and vehicles on the cost model but the equipment on the revaluation model.
REQUIRED:
Prepare the Statement of Cash Flows of Lilliput’s Travels CC for the financial year ended 30 June 2022.
Ignore VAT. Show all workings clearly.
(65 marks)
Aligns to SAICA competencies: D1.1 Financial reporting: in accordance with International Financial Reporting Standards (IFRS)
a)
Prepare, analyse and evaluate general purpose financial statements in accordance with IFRS for an entity, which could be a for-profit entity, an SME, a public sector entity or a not-for-profit entity
