Question 6

Draft comparative balance sheets of Alpha Sdn Bhd as at 31 December 2019 and 2018 are as following:-

	2019	2018
	RM Million	RM Million
Cash at bank	108.5	50.4
Account receivable (less: provision for doubtful debts)	393.0	219.0
Inventories	84	134.4
	585.5	403.8
Plant and equipment (NBV)	475.6	364.8
Investment in government securities	33.6	33.6
	509.2	398.4
Total assets	1,094.7	802.2
Ordinary shares	530	290
10% Preference shares of RM1 each	180	180
Retained earning	105	73.5
	815	543.5
Account payable	205.9	197.8
Tax payable	15	10
Deferred Taxation	37.8	50.9
10% Debentures	21	-
	279.7	258.7
	1,094.7	802.2

Draft Income statement for the year ended 31 December 2019

	RM Million
Sales	860
Less : Cost of sales	(560)
Gross profit	300
Operating expenses	(224.4)
Operating profit	75.6
Investment Income	9
Profit before tax	84.6
Taxation	(18.8)
Profit after tax	65.8
Interim dividend paid	(34.3)
Profit attributable to members	31.5

Additional information:

(i) Operating expenses include depreciation charge for the year of RM46.8 million and an increase in provision for doubtful debts of RM2.5 million.

(ii) During the year an item of plant with a net book value of RM19.2 million, was disposed off with a gain on disposal of RM14.4 million.

(iii) The 10% Debentures were issued at par on 31 December 2019.

Required:-

(b) Show the reconciliation of profit before tax to net cash flow from operating activities.