Preparation of a statement of cash flow (advanced)

An income statement and a comparative balance sheet for Borachio Ltd are as follows:

BORACHIO LTD COMPARATIVE BALANCE SHEET AS AT 30 JUNE 2022 AND 2021 2022 2021

$000 $000 Cash 162 144 Accounts receivable 145 128 Allowance for doubtful debt (16) (12)

Inventory 175 190 Prepaid insurance 9 6 Long-term investments 205 163 Land 172 149 Equipment 449 437 Accumulated depreciation – equipment (214) (149)

Total assets 1 087 1 056 Accounts payable 103 63 Accrued expenses 27 11 Interest payable 9 9 Income tax payable 44 23 Bonds payable 100 250 Share capital 490 420 Retained earnings 314 280 Total liabilities and shareholders’ equity 1 087 1 056 BORACHIO LTD INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2022 $000 $000 Sales 1 520 COGS (1 110)
Gross profit 410 Operating expenses Bad debts expense (15)
Insurance expense (9)
Depreciation expense (65)
Other operating expenses (85)
Total operating expenses (174)
236 Other income:
Dividends received 5 Other expenses:
Interest expense (25)
Loss on disposal of land (18)
(38)
Income before income tax 198 Income tax 88 Net profit 110 The following additional information during the year was obtained from an examination of the ledger:
a A parcel of land with an original cost of $60 000 was sold.
b All sales over the year are made on credit.
Required:
1 Prepare a statement of cash flows (direct method) for the year ended 30 June 2022.
2 Prepare a reconciliation statement (indirect method) for the year ended 30 June 2022.