Additional information: 1. During the year no equipment was sold 2. Accounts payable all relate to purchases of inventories 3. Accrued expenses in the balance sheet at 30 June 2020 were for unpaid wages 4. Interest expenses were all paid during the year 5. All sales are on credit 3 Required: a) Prepare a properly classified Statement of Cash Flows for the year ended 30 June 2020 from the above information. Show all workings. b) Provide two reasons why a company may have a net profit but negative cash flows from operating activities. The following are the financial reports of Herkshire Bathaway Enterprises: Herkshire Bathaway Enterprises Balance Sheet as at 30 June 2019 Current assets Current liabilities Bank 20 000 Accounts payable 12 000 Accounts receivable 16 000 Inventory 32 000 68 000 Non-current liabilities Loan 20 000 Non-current assets Total liabilities 32 000 Equipment 120 000 Less Acc. Dep (28 000) 92 000 Owners' equity Capital 128 000 Total assets $160 000 Total liabilities &owners' equity $160 000 Income Statement for the year ended 30 June 2020 Sales 240 000 Less: Cost of Goods Sold (140 000) Gross profit 100 000 Less: Operating Expenses Depreciation (24 000) Wages expense (16 000) Interest expense (1600) (41 600) Net Profit $58 400 Current assets Bank Accounts receivable Inventory Non-current assets Equipment Less Acc. Dep Balance sheet as at 30 June 2020 Current liabilities 38 400 Accounts payable 24 000 24 800 Accrued expenses 800 24 800 20 000 83 200 Non-current liabilities Loan 12 000 152 000 Total liabilities 36 800 (52 000) 100 000 Owners' equity Capital 128 000 Ret. Earnings (beg) 0 Plus profit 58 400 Less drawings (40 000) Ret. Earnings (end) 18 400 Total owners' equity 146 400 $183 200 Total liabilities & owners' equity $183 200 Total assets