3 The followings are the financial statements of ZPR Berhad. Statement of Profit or Loss for the year ended 31 December 2017 RM Turnover 1,606,000 Cost of sales (990,000) Gross profit 616,000 Gain on sale of plant and machinery 11,200 Administration cost (196,500) Selling and distribution cost (37,000) Profit from operation 393,700 Interest (16,000) Profit before tax 377,700 Taxation (85,000) Profit after tax 292,700 Statement of Financial Position as at: 31-Dec-16 31-Dec-17 NON-CURRENT ASSETS RM RM Land 300,000 411,000 Plant and machinery (carrying value) 181,500 120,000 Motor vehicle (carrying value) 58,500 52,000 Investment 90,000 67,000 CURRENT ASSETS Inventories 220,000 198,000 Trade receivables 445,600 698,000 Bank 70,900 258,150 Prepaid Administration costs 4,750 TOTAL ASSETS 1,366,500 1,808,900 EQUITY RM RM Ordinary shares of RM1 each 710,000 850,000 Share premium 40,000 50,000 Retained profits 250,500 491,650 NON-CURRENT LIABILITIES 7% debentures 116,000 116,000 Long-term bank loan. 100,000 130,000 CURRENT LIABILITIES Trade payables 49,000 60,000 Tax payable 48,000 57,000 Accrued selling and distribution cost 5,000 2,700 Dividend payable 48,000 51,550 TOTAL EQUITY AND LIABILITIES 1,366,500 1,808,900 Additional information: 1. The depreciation for motor vehicle, used by the selling department, was RM6,500 and the depreciation for plant and machinery was RM16,500. 2. No other non current assets was purchased, except for land. 3. A plant and machinery with a carrying value of RM45,000 was disposed. 4. 5. 6. The increase in the ordinary share capital was due to the issue of shares at premium. The total dividend appropriated for the year amounted to RM51,550. No interim dividend was paid during the year. Part of the investments were sold at cost. Required: a. Prepare the Statement of Cash Flow for the year ending 31 December 2017, using the direct method in accordance with MFRS 107. (The note on the reconciliation of profit is not required). (15 marks) b. Briefly discuss three (3) purposes of preparing a statement of cash flow. (5 marks) (Total: 20 marks) EQUITY RM RM Ordinary shares of RM1 each 710,000 850,000 Share premium 40,000 50,000 Retained profits 250,500 491,650 NON-CURRENT LIABILITIES 7% debentures 116,000 116,000 Long-term bank loan. 100,000 130,000 CURRENT LIABILITIES Trade payables 49,000 60,000 Tax payable 48,000 57,000 Accrued selling and distribution cost 5,000 2,700 Dividend payable 48,000 51,550 TOTAL EQUITY AND LIABILITIES 1,366,500 1,808,900 Additional information: 1. The depreciation for motor vehicle, used by the selling department, was RM6,500 and the depreciation for plant and machinery was RM16,500. 2. No other non current assets was purchased, except for land. 3. A plant and machinery with a carrying value of RM45,000 was disposed. 4. 5. 6. The increase in the ordinary share capital was due to the issue of shares at premium. The total dividend appropriated for the year amounted to RM51,550. No interim dividend was paid during the year. Part of the investments were sold at cost. Required: a. Prepare the Statement of Cash Flow for the year ending 31 December 2017, using the direct method in accordance with MFRS 107. (The note on the reconciliation of profit is not required). (15 marks) b. Briefly discuss three (3) purposes of preparing a statement of cash flow. (5 marks) (Total: 20 marks)