1 MTC - Wear You... LTE 11:55 @ 1 41% 0 4 of 5 Question 2 (35 Marks: 70 minutes) Fizz Limited is the largest manufacturer of balloons in the country. The statement of profit or loss and statement of changes in equity of Fizz Limited for the year ended 31 December 2020, as well as the statement of financial position of the company at 31 December 2020, are shown below: FIZZ LIMITED Statement of profit or loss for the year ended 31 December 2020 N$ Sales 300,000 Cost of sales (200.000) Gross profit 100,000 Operating expenses (26,000) Selling expenses 10,000 Administration expenses 7,000 Loss on disposal of equipment 1,000 Depreciation 8,000 Profit before tax 74,000 Income tax expense (29,600) Profit for the period 44.400 FIZZ LIMITED Statement of changes in equity for the year ended 31 December 2020 Share Retained Total capital earnings NS N$ N$ Balance at 01/01/x6 100,000 10,000 110,000 Profit for the period 44.400 44,400 Dividends (20,000) (20,000) Issue of share capital 10,000 10,000 Balance at 31/12/X6 110,000 34,400 144,400 ..MTC - Wear You... LTE 11:55 Dividends Issue of share capital 10,000 Dalanna - 31/12/X6 110,000 (20,000) 1 41% (20,000) 10,000 144,400 34,400 5 of 5 Fizz Limited Statement of Financial Position as at 31 December 2020 2020 N$ ASSETS 2019 N$ Non-current assets Equipment at cost Accumulated depreciation 85,000 100,000 15,000 80,000 89,000 9,000 Current assets Inventories Accounts receivable Selling expenses paid in advance Bank 109,800 60,000 12,000 1,200 36,600 194.800 70,500 40,000 20,000 1,500 9,000 150.500 110,000 34,400 100,000 10,000 EQUITY ANSD LIABILITIES Equity Share capital Retained earnings Non-current liabilities Loan Current liabilities Account payable Administration expenses payable Current tax payable: income tax 10,000 20.000 20,600 800 19,000 194.800 10,000 500 10,000 150.500 Equipment costing N$15,000 was purchased during the year when certain other equipment was traded in as part of the purchase price. REQUIRED: a) Prepare a statement of cash flows of Fizz Limited for the year ended 31 December 2020 using the direct method. (25 marks) b) Prepare the note to the statement of cash flows for the reconciliation of profit before tax to cash generated from profits for the year ended 31 December. (10 marks)