Question 1 (11 marks) 1. Using the information below for ABC Pty Ltd, prepare a 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 $ 540,350 (387,140) 153,210 Sales revenue Cost of Goods Sold Gross profit Expenses: Wages Utilities Insurance Rent Depreciation Interest Supplies 58,400 5,600 4,800 12,000 14,200 980 10,800 106,780 46,430 13,929 $ 32,501 Profit before tax Income tax expense Profit for the period ABC Pty Ltd Balance sheet at 31 December 2017 2017 2016 Current assets Cash $ 4,271 $ 4,250 Accounts receivable 126,820 120,340 Merchandise inventory 104,240 122,840 Supplies 4,890 3,450 Prepaid rent 12,000 12,000 252,221 262,880 Non-current assets Property and eq., at cost 384,970 384,970 Accumulated depreciation (76,600) (62,400) 308,370 322,570 2017 2016 Current liabilities Accounts payable 68,240 84,200 Wages Payable 12,380 Interest payable 980 Loans payable (current) 10,000 10,000 79,220 106,580 Non-current liabilities Loans payable 150,000 150,000 Equity Share capital Retained earnings Total equity 200,000 200,000 131,371 128,870 331,371 328,870 Total assets $ 560,591 $ 585,450 Total Liab. and Equity $ 560,591 $ 560,591