Sarah Limited leased a machine which had a fair value of $57,030 to Jane Limited on 30 June 2018 with the following terms:

Shown below is an extract from the comparative statements of financial position and statement of profit or loss of Guardian Limited for the year ended 30 June 2019:

Guardian Ltd
Statement of Financial Position as at 30 June 2019
	30-Jun-19	30-Jun-18
CURRENT ASSETS	$	$
Cash	39,000	76,100
Trade Receivables	143,200	125,300
Allowance for Doubtful Debts	(5,000)	(3,000)
Prepaid Expenses	36,800	37,000
Inventory	286,000	232,200
	500,000	467,600
NON-CURRENT ASSETS
Equipment	370,200	344,200
Accumulated Depreciation - Equipment	(96,900)	(67,000)
Land and Buildings	807,000	403,000
Accumulated Depreciation- Buildings	(116,900)	(97,600)
Deferred Tax Asset	5,000	1,000
Long Term Investments	81,000	171,000
	1,049,400	754,600
TOTAL ASSETS	1,549,400	1,222,200
CURRENT LIABILITIES
Bank Overdraft	30,700	1,500
Accounts Payable	223,000	229,000
Accrued Expenses	27,500	28,000
Current Tax Liability	37,000	35,000
	318,200	293,500
NON- CURRENT LIABILITIES
Deferred Tax Liability	6,500	6,500
Loan Payable	247,500	157,500
Debentures due 30/11/2023	261,000	211,000
	515,000	375,000
TOTAL LIABILITIES	833,200	668,500
Share Capital	566,100	402,100
Retained Earnings	150,100	151,600
	716,200	553,700
TOTAL EQUITY AND LIABILITIES	1,549,400	1,222,200

Guardian Ltd
Statement of Profit or Loss
for the year ended 30 June 2019
Sales	889,600
Less: Cost of Sales	(539,300)
Gross Profit	350,300
Other Income:
Gain on Sale of Investments	47,500
Less :Operating Expenses:
Administration Costs	(151,000)
Other Expenses	(59,900)
Bad Debts Expense	(3,500)
Depreciation Expense	(49,200)
Interest Expense	(51,000)
Profit before Tax	83,200
Income Tax Expense	(26,010)
Profit for the year	57,190

Additional Information

a. New equipment of $26,000 was purchased for cash.

b. Additions to the buildings were paid in cash.

c. Long Term Investments with a carrying amount of $90,000 were sold for cash at a profit of $47,500.

d. Debentures were issued for cash.

e. Dividends were paid during the year in cash.

f. Shares were issued for cash.

Required:

1. Prepare a statement of cash flows for Guardian Limited for the year ended 30 June 2019 using the direct method as required by AASB 107. (10 Marks)

2. Prepare a reconciliation of net cash flows arising from operating activities with profit. (5 marks)