18.9 Statement of cash flows for sole trader and analysis LO5 The financial statements for the business of 'Trinh's Nail Supplies for the past two years are pre- sented below. Additional information 1. All purchases and sales of inventories are on credit. All purchases of office supplies are for cash. 2. The bank overdraft is considered to be part of the entity's cash management function. 3. During the year ended 30 June 2020, the owner, Trinh, withdrew S12 800 in cash for personal use. 4. The entity sold some fixtures for $1200 cash during the current year. These fixtures initially cost $4200 and had been written down to a carrying amount at the date of sale of $2000. 5. Depreciation of fixtures has been included in other expenses' for the year ended 30 June 2020. All remaining other expenses were paid in cash. TRINH'S NAIL SUPPLIES Comparative Income Statements for the year onded 30 June 2019 2020 Sales $400 000 $500000 Cost of sales 850000 458000 GROSS PROFIT 50000 42000 Interest Income 1000 2000 Loes on sale of fixtures 800 51000 43200 Office supplies used 11000 Other expenses 29000 29000 39000 40000 PROFIT 12000 3200 10000 TRINH'S NAIL SUPPLIES Comparative Statements of Financial Position G A 30 June 2019 2020 $ 4400 42000 80 000 ASSETS Cash at bank Accounts receivable Inventory Office supplies Freehold property Factures Accumulated depreciation - batures Investments 2000 60 000 40 000 (16000) 6000 $218.400 $ 60000 40 000 5000 80000 46000 20200) 16000 $228 800 LIABILITIES AND EQUITY Bank overdraft Accounts payable Trinh, Qua 28 000 192 400 $218400 4000 40000 182800 $ 226800 Required (a) Prepare the statement of cash flows for Trinh's Nail Supplies for the year ended 30 June 2020, using the direct method. (b) Comment on the cash flow position of the entity as shown in the statement of cash flows