Comparative information as at 30 June 2020 and 30 June 2021 for Pretentious Ltd is as follows.

Question:

Comparative information as at 30 June 2020 and 30 June 2021 for Pretentious Ltd is as follows.

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Additional information

1. Gross profit for the year ended 30 June 2021 was $321 000, and consisted of the following.

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2. Purchases of inventory for the year were $545 000.

3. All purchases and sales of inventories were on credit.

4. Profit for the year ended 30 June 2021 was $62 500, after deducting expenses of $258 500 from the gross profit figure.

5. Expenses of $258 500 include depreciation on buildings, and on plant and equipment, a loss on sale of land, and $10 000 in interest expense.

6. During the year ended 30 June 2021, cash dividends were paid.

7. Building extensions were paid for during the year, and a block of land, costing $75 000, was sold for $62 500 cash.

8. No plant was purchased or sold during the year.

Required

(a) Prepare the statement of cash flows for Pretentious Ltd for the year ended 30 June 2021 using the direct method.

(b) Show how cash flows from operating activities in the statement would be presented under the indirect method.

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Financial Accounting

ISBN: 9780730363217

10th Edition

Authors: John Hoggett, John Medlin, Keryn Chalmers, Claire Beattie, Andreas Hellmann, Jodie Maxfield

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