Additional information

(a) Land with an original cost of $44 800 was sold for cash of $37 800 during the year.

(b) Machinery with a carrying amount of $25 000 (cost $33 000 and accumulated depreciation $8000) was sold for cash of $34 000.

(c) Lease income is earned from leasing part of the land holdings that are in excess to operating needs.

Required:

1. Prepare a note disclosure to reconcile the net cash flows from operating activities with the profit for the year using indirect method. (7 marks)
2. Prepare the statement of cash flows of Lodh Ltd for the year ended 30 June 2017 based on the direct method of presentation. (3 marks)

Below are the statements of financial position of Lodh Ltd as at 30 June 2020 and 2021, and its statement of profit or loss and statement of changes in equity for the year ended 30 June 2021: 2020 $ Lodh LTD Statements of Financial Position as at 30 June 2021 Assets Cash at bank S 23 000 Accounts receivable 39 500 Inventory 76 000 Prepaid insurance 3 500 Land 39 000 Machinery 360 000 Accumulated depreciation: machinery (81 000 Total assets 460 000 S Liabilities Accounts payable S 25 000 Interest payable 3 000 Other accrued expenses 7 000 Long-term borrowings 145 000 Equity Share capital 170 000 Retained earnings 110 000 Total liabilities and equity 460 000 S 6 500 37 500 66 000 3 600 44 700 300 000 (67 000 391 300 $ 28 000 3 500 4 400 117 000 100 000 141 400 391 300 $ Lodh LTD Statement of Profit or Loss for the year ended 30 June 2021 Income Sales 425 000 Lease income received 7 500 Gain on the sale of machinery 8 000 Less: Expenses Cost of sales s 280 000 Interest expense 11 500 Loss on the sale of land B 9 000 Depreciation expense 24 000 Insurance expense 3 500 Other operating expenses 81 500 Profit for the year $ 440 500 S 409 50 0 31 00 0 Total Lodh LTD Statement of Changes in Equity for the year ended 30 June 2021 Share Other Retained capital reserves earnings $100 000 141 400 41 000 (72 400 70 000 $170 000 S 110 000 Balance at 1/7/20 Profit the period Dividends paid Issue of share capital Balance at 30/6/21 $241 400 41 000 (72 400 70 000 280 000 Below are the statements of financial position of Lodh Ltd as at 30 June 2020 and 2021, and its statement of profit or loss and statement of changes in equity for the year ended 30 June 2021: 2020 $ Lodh LTD Statements of Financial Position as at 30 June 2021 Assets Cash at bank S 23 000 Accounts receivable 39 500 Inventory 76 000 Prepaid insurance 3 500 Land 39 000 Machinery 360 000 Accumulated depreciation: machinery (81 000 Total assets 460 000 S Liabilities Accounts payable S 25 000 Interest payable 3 000 Other accrued expenses 7 000 Long-term borrowings 145 000 Equity Share capital 170 000 Retained earnings 110 000 Total liabilities and equity 460 000 S 6 500 37 500 66 000 3 600 44 700 300 000 (67 000 391 300 $ 28 000 3 500 4 400 117 000 100 000 141 400 391 300 $ Lodh LTD Statement of Profit or Loss for the year ended 30 June 2021 Income Sales 425 000 Lease income received 7 500 Gain on the sale of machinery 8 000 Less: Expenses Cost of sales s 280 000 Interest expense 11 500 Loss on the sale of land B 9 000 Depreciation expense 24 000 Insurance expense 3 500 Other operating expenses 81 500 Profit for the year $ 440 500 S 409 50 0 31 00 0 Total Lodh LTD Statement of Changes in Equity for the year ended 30 June 2021 Share Other Retained capital reserves earnings $100 000 141 400 41 000 (72 400 70 000 $170 000 S 110 000 Balance at 1/7/20 Profit the period Dividends paid Issue of share capital Balance at 30/6/21 $241 400 41 000 (72 400 70 000 280 000