Additional information (a) On 1 July 2019, 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 $4,000 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. Required: Prepare the statement of cash flows of Shangri-la Fiji for the year ended 30 June 2020 based on the indirect method of presentation. (Do not forget that there will be indirect method of presenting operating cash flow) Part B The managing director of XYZ company said The easiest way for managers to manage earnings or manipulate profits is to manipulate the accrual accounting adjustments. (i) Do you agree or disagree with this view? (provide reasons for your answer) (ii) Provide 3 examples of managerial decisions that may lead to an increase in profit but have no impact on the cash flows from operating activities.

Question 17: Statement of Cash Flows [20 Marks] Suggested Time: You should spend about 35 minutes on this section Part A Shangi-a Fiji has been a popular visit for tourists. Below are the selected financial statements of the company Shangri-la Fiji Statement of Financial Performance as at 30 June 2020 Revenue Sales $ 180,000 Less expenses Cost of sales Beginning inventories $ 96,000 add purchases $ 112,000 less ending inventory $ 112,000 $ 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 $ 168,000 Profit for the year $ 12,000 OCI Foreign currency translation $ 800 Gain on pension fund $ 20 Total Comprehensive Income $ 12,820 Shangrila Fiji Statement of Financial Position as at 30 June 2020 Assets 2020 2019 Cash at bank $ 18.000 $ Accounts Receivable $ 34,000 $ 28.000 Inventories $ 112,000 $ 96,000 Equipment $ 72,000 $ 60.000 Accumulated Depreciation - Equipment $ 30,000 $ 18.000 Land $ 40,000 $ 80.000 Buildings $ 120,000 $ 120,000 Accumulated Depreciation - Building $ 10,000 $ 6.000 Toral Assets $ 356,000 $360,000 Liabilities Accounts Payable $ 52,000 $48.000 Bank overdraft $ $ 20,000 Equity Share Capital $ 214,000 $ 200.000 Retained Earings $ 90,000 $ 92.000 Total Liabilities and Equity $ 356,000 $360,000