Cash flow statement for the month ended 31 July 2024

$ $
Cash flow from operating
activities
Inflows
Cash sales 56,000
Interest revenue 400
Receipts from debtors 10,000 66,400
Less outflows
Cash purchase of stocks 15,000
Payment to creditors 40,000
Wages 21,000
Advertising 900
Custom duties 500
Drawings 2,000
Electricity 3,000
Freight in 600
Freight out 800
Insurance 700
Interest expense 2,000 (86,500)
Net cash flow from operating (20,100)
activities
Cash flow from investing
activities
Purchase of shop fittings (5,500)
Net cash flow from investing (5,500)
activities
Cash flow from financing
activities
Additional capital 12,000
 Repayment of loans – All Bank (3,000)
Net cash flow from financing 9,000
activities
Change in cash (negative) (16,600)
Bank at start 5,000
Bank at end (11,600)

Bank account

Date 2024 Cross- Amount Date 2024 Cross- Amount

reference reference
July 1 Balance 5,000 July 31 Total cash 95,000
payments
July 31 Total cash 78,400
receipts
July 31 Balance 11,600
95,000 95,000
Aug 1 Balance 11,600
Income statement for the month ended 31 July 2024

$ $
Revenue
Sales 78,000 78,000
Less cost of goods sold
Cost of sales 39,000
Freight in 600
Custom duties 500 (40,100)
Gross profit 37,900
Add other revenue
Interest revenue 400 400
38,300
Less other expenses
Advertising 900
Electricity 3,000
Interest expense 2,000
Insurance 700
Wages 21,000
Freight out 800 (28,400)
Net profit / (loss) 9,900
Balance sheet as at 31 July 2024

Current $ $ Current $ $
assets liabilities
Debtors 21,000 Bank 11,600
control
Stock control 35,100 56,100 Creditors 44,000
control

Loan – All 36,000 91,600

Bank

Non-current Non-current
assets liabilities
Delivery van 22,000 Loan – All 41,000 41,000
Bank
Office 2,500
equipment
Shop fittings 5,500
Term deposit 50,000
Building 11,0000 190,000 Owner’s
equity
Capital 106,500
Less drawings (2,900)
Add net profit 9,900 113,500
Total assets 246,100 Total equities 246,100
Written report

Cash Flow Statement

Referring to significant items to support your response, explain the positive or negative
contribution each activity has had on the change in cash for the month ended July 2024.

The overall cash balance decreases by $16,600 due to total cash outflows being much greater than
total cash inflows. This resulted in the bank account from an opening balance of $5,000 to decrease
to a negative $11,600 at the end of July.
Income Statement

Explain why Jacob may be disappointed with the Net Profit/Loss reported for the month of

July 2024.

Recommend two possible changes to improve revenues or expenses. Justify your response.

Sales revenue for the month was $78,000 and cost of goods sold was $40,100. This resulted in the
gross profit of $37,900. Other revenue was $400, mainly the interest revenue. Other expenses
totalled $28,400, with the largest expenses being wages of $21,000 and electricity of $3,000. The
business reported a net profit of $9,900 because total revenue earned were greater than total
expenses incurred for the reporting period.
Comparing Cash and Profit

Explain two reasons why Change in Cash and Net Profit/Loss are different for July 2024. You

must support each reason with an example from the case study.

Cash decrease by $16,600 during the month, while net profit was $9,900. This means that the
change in cash is lower than net profit.
Balance Sheet

Compare the Balance Sheet at 1 July 2024 with the Balance Sheet at 31 July 2024 and explain the
changes in Current Assets & Current Liabilities.

The business reported total assets and total equities to be $246,100.

From the start of reporting till end of reporting period, the total assets and total equities increases by
$39,100.