2022 POA Assignment Question 2 The Statements of financial position of Darwin Limited as at 31 December 2020 and 2021 and a summary of the income statement for the year ended 31 December 2021 are given below: Statement of financial position as at 31 December Non-current assets Land and buildings Plant and equipment Investment at cost Current Assets Inventory Trade receivables Cash at bank Total assets Current Liabilities Bank overdraft Trade payables 160,409 210,118 2,490 19,812 10,713 Corporation tax 6,000 Interest payable 2,000 7,400 2,500 27,812 23,103 2020 2021 You are given the following information: S S (1) Some of the debentures were repaid on 1.1.2021. 87,000 18,500 6,000 111,500 130,000 28,500 8,000 166,500 21,412 32,631 12,784 10,987 14,713 48,909 43,618 (2) During the year certain items of plant and equipment were disposed of for $4,200. The equipment had originally cost $8,000 and had a net book value at the disposal date of $5,000. (3) On 1.1.21, a bonus issue of 1 for 5 was made on the ordinary shares, utilising available profits. (4) Included in the profit before tax is investment income of $1,250 and interest expense of $5,100. Requirements: (a) Prepare a cash flow statement for Darwin Limited for the year ended 31 December 2021. (16 marks) Non-current liabilities: 10% Debentures 43,000 31,800 Total liabilities 70,812 54.903 Equity 1 ordinary shares (b) Advise the directors on two steps the directors could take to improve the bank balance in the very short-term and two steps they could take to improve the bank balance in the longer term. Shares premium account Revaluation reserve Retained profits Total equity Total liabilities and equity 10,000 21,000 14,000 27,600 35,000 48,000 30,597 58,615 89,597 155,215 160,409 210,118 (4 marks) (Total 20 marks) Summary Income statement for the year ended 31 December 2021 Profit before tax (after depreciation on plant and machinery of $12,300) Tax Profit after tax Dividend paid Retained profit for the year 45,518 7,100 38,418 8,400 30,018