Additional information:

(1) During the year, depreciation for machinery is RM22,750. Machinery with a net value of RM2,760 was disposed at a profit of RM2,000.

(2) Depreciation for office equipment during the year is RM5,520. Office equipment with cost of RM24,300 was sold for RM18,780. Loss on disposal of office equipment is RM2,760.

(3) The net profit before tax is RM41,770. Tax charge for the year is RM17,250.

(4) The cash dividends declared were RM26,910. In addition, the company received cash from issuance of share capital and debenture during the year.

Required:

(a) Based on the above information, prepare the Statement of Cash Flows for the year ended 31 December 2020 for Jeff Berhad using the indirect method.

(b) Based on your understanding, discuss which method is the better way to present the Statement of Cash Flows: Direct Method or Indirect Method?

Q2. The following Statement of Financial Position is related to Jeff Berhad Jeff Berhad Statement of Financial Position 31.12.2020 31.12.2019 RM RM 387,780 300,000 (74,520) (62,100) 40,020 50,520 (20,700) (17,940) 70,000 61,100 104,880 568,560 51,060 59,064 97,483 478,087 Non-Current Assets Machinery (at cost) Accumulated depreciation - machinery Office equipment (at cost) Accumulated depreciation - office equipment Current Assets Inventories Trade receivables Cash in bank Total Assets Shareholders' Equity Ordinary share capital Retained earnings Liabilities Bank overdraft Trade payables Dividend payable Tax payable 5% debenture Total Shareholders' Equity and Liabilities 329,500 77,280 301,900 79,670 Nil 73,140 24,840 13,800 50,000 568,560 19,320 50,977 14,980 11,240 Nil 478,087