Question 4 Cash Flow Statements (40 marks) PART A- This page - direct approach (30 marks) PART B- Next page - indirect approach (10 marks) The financial statements of Suns Limited are presented below; Suns Limited Balance Sheets as at 30 June('OOOs) 2022 2021 Current Assets Cash 95 20 Accounts Receivable 125 335 Allowance for Doubtful Debts (70 (55) Inventory 145 220 Prepaid Insurance 85 105 380 625 Non-Current Assets Land 580 $50 Buildings 400 400 Accumulated Depreciation - Buildings (220) (200) Motor Vehicles 100 85 Accumulated Depreciation - Motor Vehicles (55) (30) Equipment 75 110 Accumulated Depreciation - Equipment (50) (50) 830 865 Total Assets 1,210 1,490 Current Liabilities Accounts Payable 115 160 Interest Payable 20 45 Accrued Expenses 95 110 Income Tax Payable 110 155 340 470 Non-Current Liabilities Bank Loan 230 420 Total Liabilities 570 890 NET ASSETS $640 $600 Shareholders' Equity Share Capital 410 390 General Reserve 30 15 Revaluation Surplus 95 65 Retained Earnings 105 130 TOTAL SHAREHOLDERS' EQUITY $640 $600Suns Limited Income Statement for the Year Ended 3i} .Iune 2022('s} Sales i Less: Cost of IGoods Sold 4,925 Gross Prot 675 Service Revenue @ 895 Less Expenses: Bad Debts Expense 5i} Inventory Shortage Expense 5 Loss on Sale of Equipment 15 Depreciation Expense Buildings 20' Depreciation Expense Motor Vehicles 25 Depreciation Expense Equipment It} Interest Expense 40' Other Expenses 535 Total Expenses 800 Prot before Income Tax 95 Less: Income Tax Expense 55 Prot af'ter Income Tax 440 Additional information - The carrying amount ofthe equipment sold was $23000. - There were no honus issues of shares made during the year. - Land is the only class of asset measured using the revaluation model. All other items of Property Plant and Equipment are measured at cost. - No land was purchased or sold during the year. - A cash diyidend was paid during the year. Required: a. Prepare a Statement of Cash Flows (using the direct method} for Suns Limited for the year ended 3t} June 2022 using the direct approach. THIS PAGE [30 marks} is. Prepare a note reconciling the Operating Prot after Income Tax with Net Cash Flow from Operating Activities. NEXT PAGE (it) marks) Suns Ltd Statement of cash ow for the year ending 30 June 2132?. Cash oviI from operating activities |Dash received from customers Cash paid to suppliers and employees Interest paid Income Tax paid Other [use it required} Net cash flow from operating activities Cash ow from investing activities Proceeds from the sale of equipment Purchase of motor vehicle Net cash flow from investing activities Cash ow from financing activities Increasefdecrease in bank loan Proceeds from issue of shares Dividends paid Net cash flow from nancing activities Net increase {decrease} in cash held |[lash at the beginning of the year |[lash at the end of the year Question 4 Cash Flow Statements Suns Limited Cash Flow Statement for the year ended 30 June 2022 Cash Flow from Operating Activities Cash received from customers 5,995 Cash paid to suppliers and employees (4,900 + 630) (5,530) Income taxes paid (100) Interest paid (65) Net Cash flow from Operating Activities 300 Cash Flow from Investing Activities Proceeds from sale of equipment 10 Purchase of motor vehicle (15) Net Cash Flow from Investing Activities (5) Cash Flow from Financing Activities Decrease in bank loan (190) Proceeds from issue of shares 20 Dividends paid (50) Net Cash Flow from Financing Activities (220) Net increase (decrease) in cash held 75 Cash at beginning of year 20 Cash at end of year 95