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GROUP 3

The following is the summarized statement of financial position Malover Ltd at 31 December 2019 and 2020:

31.12.20 31.12.19

Assets	Sh. 000	Sh. 000
Freehold property at cost	380,000	360,000
Plant and machinery at cost	70,000	67,000
Furniture and fittings at cost	4,500	3,200
Investments	---	20,000
Stock	68,000	64,000
Debtors and prepaid expenses	79,000	68,000
Bank balance	41,000	18,000
Total assets	642,500	600,200
Equity and liabilities:
Share capital (issued and fully paid shares of Sh20 each)	350,000	300,000
Share premium	32,500	40,000
8% redeemable preference capital (shares of Sh200 each)	---	100,000
Profit and loss account	33,000	29,200
10% debentures	30,000	---
Capital redemption reserve fund	50,000	---
Taxation	45,000	40,000
Proposed dividend	30,000	27,000
Trade creditors and accruals	72,000	64,000
Total equity and liabilities	642,500	600,200

Additional information

1. The investments were disposed of for cash Sh. 19,800,000. Furniture and fittings with a net book of Sh. 200,000 were sold for cash Sh. 180,000.
2. The preference shares were redeemed at a premium provided out profit the share premium account. Subsequently, 2,500,000 ordinary shares of Sh20 each were issued at a premium of 25%.
3. On January 1^st 2020, Malover Ltd. issued Sh. 300,000 10% debentures at Sh96 each for every Sh100 nominal. The discount arising from this issue was charged to the profit and loss account.

4. The depreciation charged during the year was as follows:

Plant and Machinery	Sh. 21,400,000
Furniture and fittings	Sh. 800,000

Required:

1. Why is necessary for Organizations to prepare Cash Flow Statement in addition to other Financial Statements? (5 Marks)
2. Based on the Information given. Prepare Cash Flow Statement for the year ended 31 December 2020in line with International Accounting Standard (IAS 7)

(15 Marks)

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