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1. Topic 7 Handout 2023 Term 3 copy

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Tutorial Question 2: Adapted Final exam question
An Income Statement and a comparative Balance Sheet for XYZ Ltd are as follows:
XYZ Ltd
Comparative Balance Sheet
As at 30 June 2022 and 2021
Cash
Accounts receivable
Allowance for doubtful debts
Inventory
Long-term investments
Land
Buildings
Accumulated depreciation—buildings
Equipment
Accumulated depreciation—equipment
Total assets
Accounts payable
Accrued expenses
Income tax payable
Short-term loan
Long-term loan
Bonds payable
Share capital
Revaluation surplus
General reserve
Retained profits
Total liabilities & shareholders’ equity
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2022
$’000
229
145
(16)
175
214
172
186
(75)
437
(214)
$ 1,253
2021
$’000
66
128
(12)
190
169
149
225
(81)
437
(149)
$ 1,122
$
$
87
27
15
9
75
109
491
32
78
330
$ 1,253
51
11
23
20
0
259
420
17
29
292
$ 1,122
XYZ Ltd.
Income Statement
For Year Ended 30 June 2022
Sales
Cost of goods sold
Gross profit
Expenses:
Bad debt expense
Insurance expense
Depreciation expenses
Other expenses
Interest expense
Loss on disposal of land
$ 1,520,000
(1,110,000)
$ 410,000
$ (15,000)
(9,000)
(102,000)
(96,000)
(25,000)
(18,000)
(265,000)
$ 145,000
Other income:
Gain on sale of buildings
Dividends received
Profit before income tax
Income tax expense
Net profit
$ 31,000
5,000
$ 36,000
181,000
(67,000)
$ 114,000
$
The following additional information during the year was obtained from an
examination of the ledger:
•
•
•
•
Buildings with original cost of $89,000 and accumulated depreciation of
$43,000 were sold.
A parcel of land with an original cost of $60,000 was disposed of.
Another parcel of land was revalued upward.
A bonus share issue of $15,000 was declared out of Revaluation Surplus.
Required: Prepare the Cash flow statement using direct method for the financial
year ended 30 June 2022.
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