1.Using the information below for ABC Pty Ltd , prepare statement of cash flows for the year 2017 using the direct format.

2.Briefly provide an interpretation of the statement of cash flows

ABC Pty Ltd

Income statement

for the year ended 31 December 2017

Sales revenue$ 540,350

Cost of Goods Sold (387,140)

Gross profit153,210

Expenses:

Wages58,400

Utilities5,600

Insurance4,800

Rent12,000

Depreciation14,200

Interest980

Supplies10,800

106,780

Profit before tax46,430

Income tax expense13,929

Profit for the period$ 32,501

ABC Pty Ltd

Balance sheet

at 31 December 2017

2017201620172016

Current assets Current liabilities

Cash $ 4,271$4,250Accounts payable68,24084,200

Accounts receivable126,820120,340Wages Payable-12,380 Merchandise inventory104,240122,840Interest payable980-

Supplies4,8903,450Loans payable (current)10,00010,000Prepaid rent12,000 12,00079,220106,580

252,221262,880Non-current liabilities

Non-current assetsLoans payable150,000150,000

Property and eq., at cost384,970384,970

Accumulated depreciation(76,600)(62,400)Equity

308,370322,570Share capital200,000200,000

Retained earnings 131,371128,870

Total equity331,371328,870

Total assets$ 560,591$ 585,450Total Liab. and Equity$ 560,591$ 560,591