1 (Total: 30 marks) The following are the statements of financial position (balance sheet) of Prominent Pte Ltd as at 30 September 2021 and 30 September 2022. ASSETS 30 Sept 2021 30 Sept $ 2022 $ Non-current assets Property, plant and equipment at cost 173,000 165,000 Less Accumulated depreciation (46,000) (52,000) Property, plant and equipment (Net) 127,000 113,000 Total non-current assets 127.000 113,000 Current assets Inventory 48,400 56,700 Trade receivables 37,400 34,800 Cash and bank 8.600 17.300 Total current assets 94,400 108,800 Total assets 221,400 221,800 EQUITY AND LIABILITIES Equity Share capital 68,000 86,000 General reserve 6,400 9,600 Retained earnings 47,900 54,900 Total equity 122,300 150,500 Non-current liabilities Bank Loan (10%) 52,000 20,000 Total non-current liabilities 52,000 20,000 Current liabilities Trade payables 31,400 32,800 Current tax payable 15,700 18,500 Total current liabilities 47,100 51,300 Total liabilities 99,100 71.300 Total equity and liabilities 221,400 221,800 Additional information 1. Non-current assets that cost $8,000 and had a written down value (i.e., cost less accumulated depreciation) of $4,200 were disposed of during the year ended 30 September 2022 at a price of $3,500. There were no other acquisitions or disposals of non-current assets during the year. 2. Total depreciation on non-current assets for the year ended 30 September 2022 was $9,800. 3. Trade receivables are made up of the following: 30 Sept 30 Sept 2021 $ 2022 $ Trade receivables 39,100 36,200 2 Less Provision for bad (1,700) debts Net trade receivables (1,400) 37.400 34.800 4. The current tax payable at 30 September 2021 was paid in May 2022. 5. The proposed dividend for the year 30 September 2023 is $29,600 and the proposed dividend for the year 30 September 2022 was $34,800. If approved at the annual general meeting (AGM), the dividend is paid for immediately. The AGM is usually held three months after the reporting period end date (i.e., 30 September). 6. During the year, 10,000 shares were issued at $1.80 per share. 7. Profit before interest and taxes for the year ended 30 September 2022 is $65,500. Required: a) Your task is to prepare a Statement of Cash flows for the year ended 30 September 2022. 20 marks b) Explain why profit should be reconciled to net operating cash flows. Give examples from this question to explain your answer. 10 marks Question 2 (Total: 35 marks) Prominent Pte Ltd produces furnitures at several factories. Its Seberang Prai factory produces office chairs. Management aims to increase production in the coming year to 800 units. Therefore, management is exploring two production strategies for the coming year. The first strategy is to continue operations with the existing machine, Machine A, and the second strategy is to rent a new machine, Machine B, to produce the office chairs. The monthly rental of Machine B is $14,000. Machine B takes half an hour to produce one office chair. However, it requires a more skilled labour force with an hourly rate of $30 per hour. Comparatively, continuing to use Machine A means that costs will remain the same. Machine A is 5 years old and is operating below capacity. The hourly labour rate is $20 and the materials required for each unit is $30. Each office chair is assembled within an hour. Each unit of the finished office chair is sold for $120.The fixed monthly running costs of the factory is $21,000. Required: a) Your task is to calculate break-even point in units, break-even point in $ (round to the nearest $), unit contribution margin for each strategy. 10 marks b) For each strategy, what is the profit that can be generated at the target production level of 800 units? 5 marks c) For each strategy, calculate the margin of safety in units and as a percentage of expected 5 marks sales volume. 3