A & L Mechanics is operated by Adrian and Len in partnership. Financial data for the partnership follow.

Additional information

1. All profits/losses are shared equally by Adrian and Len who also withdrew cash during the year.

2. The vehicle that was sold had originally cost $20 000 (second‐hand) and had been depreciated down to $4000.

Required

(a) Prepare a statement of cash flows for the year ended 30 June 2020 using the direct method.

(b) Comment on the statement of cash flows with respect to the operating, investing and financing activities of A & L Mechanics.

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ASSETS Cash Inventory Accounts receivable A & L MECHANICS Comparative Statements of Financial Position as at 30 June 2019 $ 32800 2020 80 000 32 800 1200 $ 38,000 104 000 30 000 1 400 Prepaid insurance Long-term investments 28000 40 000 Motor vehicles 168 000 180 000 Accumulated depreciation motor vehicles (52 000) (72 000) $290 800 $321 400 LIABILITIES AND EQUITY Accounts payable 40 000 28 000 Accrued sundry expenses Long-term loan Adrian: Capital 700 550 70 000 50 000 40 000 60 000 Retained earnings 14000 60 700 Len: Capital 80 000 80 000 Retained earnings 46 100 42 150 $290 800 $321 400