McD2060 Trim3 2014 Tutorial 7 Cash Flow Questions Student Handout

MCD2060 Trimester 3 2014 Tutorial 7 Cash Flow Student Handout

Required

1. Before Tutorial 7 Moodle Questions 1 and 2
2. No Presentation Question this week
3. In Tutorial 7 Additional Tutorial Questions 1 and 2
4. Page 608 Question 1
5. Also from Tutorial 5 Textbook Page 120 Question 3 B Millar (Modified)

Before coming to Tutorial 7 Readings – Prescribed textbooks

Gerrand, J. Hardy L and Contessotto C (2012). Introduction to Financial Accounting. McGraw Hill.  Second Edition ISBN 9781121754096

Chapter 11 pages 565 – 610

Financial Reporting Handbook (2014) and E-text Registration Card 

ICAA (Institute of Chartered Accountants Australia) John Wiley and Sons Australia ISBN: 9780730310082

AASB 107

Before Tutorial 7 Question 1

Blackboard Questions – post your attempt to blackboard before your tutorial

Cash Flow

Briefly summarise the arguments in support of the use of the Statement of Cash Flows (not less than 80 words)

Before Tutorial 7 Question 2

Moodle Questions – post your attempt to moodle before your tutorial

Companies

The shareholders’ equity section of Rhône-Poulenc Pharmaceuticals balance sheet as at 1 July 2010 was as follows:

Shareholders’ Equity

Share Capital – Ordinary (20,000,000 shares, fully paid)                      $400,000,000

Retained Earnings                                                             $20,000,000

Reserves                                                                     $10,000,000

The following shareholders’ equity and taxation transactions occurred during the year ended 30 June 2011

•        On 1 January, Directors issued 4,000,000   6%   $10.00 preference shares in exchange for land

•        On 5 January a $0.10c interim dividend per share was declared on the ordinary shares.

•        On 6 February the ordinary interim dividend was paid in cash.

•        On 30 June the company’s income tax expense was estimated to be $4,800,000.

•        On 30 June the Profit and Loss Summary Account had a credit balance of $11,200,000, which was closed to retained profits.

•        On 30 June the company transferred $1,600,000 from retained earnings to Reserves.

•        On 30 June Directors declared a 6% final preference dividend, and a $0.15 ordinary dividend. All dividends would be paid on 1 September.

Note the quoted % applies for a full 12 month period with preference shares. It must be adjusted if the shares have not been held for a full year.

•        On 15 September a payment of $4,800,000 was made to the tax office.

Required:

Prepare the journal entries to record the above transactions and events.

MCD2060 Trimester 3 2014 Tutorial 7 Cash Flow Student Handout

Before Tutorial 7 Question 2  Moodle Questions – post your attempt to moodle before your tutorial –

Moodle Question 1 Rhône-Poulenc Pharmaceuticals

MCD2060 Trimester 3 2014 Tutorial 7 Cash Flow Student Handout