Additional information

(a) On 1 July 2016, the shareholders injected a capital contribution of $14 000 cash into the business.

(b) During the year, equipment costing $12 000 and written down to a carrying amount of $10 000 was sold for $4000 cash.

(c) Half of the land on hand at the beginning of the year was sold for $32 000 cash.

(d) During the year, dividends to shareholders were declared and paid.

(e) The bank overdraft is considered to be an integral part of the companys cash management arrangements.

(f) Ignore income tax.

Required

Prepare the statement of cash flows of Sparko Ltd for the year ended 30 June 2017 based on the direct method of presentation. Include a note disclosure to reconcile the profit for the year with net cash flows from operating activities.

Selected financial statements of Sparko Ltd are shown below. 2016 $ SPARKO LTD Statements of Financial Position as at 30 June 2017 Assets Cash at bank $ 13 000 Accounts receivable 34 000 Inventory 112 000 Equipment 72 000 Accumulated depreciation - equipment (30 000) Land 40 000 Buildings 120 000 Accumulated depreciation - buildings (10 000) Total assets $ 356 000 Liabilities Accounts payable $ 52 000 Bank overdraft Equity Share capital 214 000 Retained earnings 90 000 Total liabilities and equity $ 356 000 28 000 96 000 60 000 (18 000) 80 000 120 000 (6 000) 360 000 $ $ 48 000 20 000 200 000 92 000 360 000 $ S 180 000 SPARKO LTD Statement of Profit or Loss for the year ended 30 June 2017 Income Sales revenue Less: Expenses: Cost of sales: Beginning inventory S 96 000 Add: Purchases 112 000 Less: Ending inventory (112 000) S 96 000 Depreciation - equipment 14 000 Depreciation - buildings 4 000 Interest expense 2 000 Other expenses 38 000 Loss on sale of land 8 000 Loss on sale of equipment 6 000 Profit for the year 168 000 12 000 S