The comparative statements of financial position of Laguna Ltd as at 30 June 2019 and 2020, the statement of profit or loss and other comprehensive income and the statement of changes in equity for the year ended 30 June 2020 are shown below.

Additional information

1. Other expenses include $27 000 depreciation expense on plant and insurance expense of $4000.

2. All sales and purchases of inventory are on credit.

3. Plant which had cost $30 000 and had a carrying amount of $17 000 was sold for $26 000 cash.

4. Ignore taxes.

Required

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

(b) Prepare the note reconciling cash flows from operating activities to profit.

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LAGUNA LTD Comparative Statements of Financial Position as at 30 June ASSETS Cash at bank Accounts receivable Lease income receivable Inventory Prepaid insurance Property Plant 300 000 2019 $ 6500 35000 2500 66 000 3500 90 000 $ 23000 30 000 3500 82 000 2500 40 000 360 000 2020 Accumulated depreciation - plant (67 000) (81 000) $436 500 $460 000 LIABILITIES AND EQUITY Accounts payable Interest payable Other expenses payable Mortgage payable Share capital General reserve Retained earnings 32 000 6000 20 000 5000 4 500 5000 120 000 125 000 125 000 170 000 - 149 000 $436 500 25 000 110000 $460 000