1: You are an accounting supervisor for FRC Inc. Your assistant prepared Statement of the cash flows for your review. Following are the financial statements for FRC Information: a) Depreciation expense or the year was $ 4,658,000. b) Assets with a carrying value of $1,974,000 was disposed off with a gain of $720,000. FRC Inc. Statement of Profit or Loss Account For the year ended 30th June 2020 Sales Less: COGS Other expenses and gains Profit before tax Tax expense Profit after tax $ 48,000 (22,000) (7.826) 18,174 (4.550) 13,624 FRC Inc. Statement of Financial Position As at 30th June 2020 2020 2019 $'000 $'000 Assets Non-Current Assets 45,282 28,574 Current Assets: Inventory 3,560 8,635 Trade Receivable 6,405 4,542 Cash 6,019 1,063 Total Current Assets 15,984 14,240 Total Assets 61,266 42,814 Equity and Liabilities Share Capital 20,000 19,000 Retained Earnings Share Premium Total Equity Liabilities: Long-term Loan Current Liabilities: Bank Overdraft Trade Payables Taxation 1.365 496 19,089 5,465 40,454 24,961 9,000 10,300 1,230 429 7,562 4,364 3,020 2,760 Total Current Liabilities Total Liabilities Total Equity and Liabilities FRC Inc. Statement of Cash Flows (Prepared by your assistant) As at 30th June 2020 Cash flows from Operating Activities: Profit before tax Add: Depreciation Expense 11,812 7.553 20,812 17,853 61,266 42,814 $'000 $'000 13,624 4,658 Add: Gain on sale of assets 720 Decrease in inventory (3,560) Increase in Receivables (1,863) Increase in Payables 7.562 Increase in bank overdraft 801 Cash generated from operating Activities 21,924 Net cash by Investing Activities Sale of Assets 1,974 Gain on Sale (720) Purchase of Asset (16,708) Net Cash generated by Investing Activities (15,454) Net cash by Financing Activities Issue of shares 1,000 Loan Repayment (1,300) Stock dividend (1,974) Net Cash generated by Financing Activities (2,274) Net Decrease in Cash (596) Add: Beginning cash and cash equivalent 1,063 Closing cash and cash equivalent 467 Required: 1) IV) Identify the errors and omissions (if any) in the cash flow statement prepared by the assistant by re- drafting the correct one. You are required to prepare a comprehensive analysis on why you consider a particular treatment incorrect. Compute cash received from customers and cash paid to suppliers from the above information. Prepare horizontal analysis of the balance sheet and comment. (Minimum words requirement of 700). Comment on the liquidity and profitability of the company. (Minimum words requirement of 700 each)