Additional information:

• The entity paid an interim dividend and declared a final dividend.
• During the year, equipment was sold for RM70,000 cash. This equipment cost RM120,000 originally and had a net book value of RM20,000 at the time of sale.
• All depreciation expense has been included in the operating expenses.

Required:

1. Prepare the Statement of Cash Flows for the year ended 31 December 2020 with the indirect method. (19 marks)
2. Comment on the cash flow position of Roston Sdn Bhd for the financial year ended 31 December 2020. (3 marks)
3. Provide recommendations on how Roston Sdn Bhd may improve on the management of its cash flows. (8 marks)

Q2. (a) The following information is extracted from the financial statements of Roston Sdn Bhd at 31 December: 2019 2020 RM RM Assets Cash Bank Accounts receivable (net) Inventory Prepaid expenses Property, plant and equipment Accumulated depreciation Total assets 15,000 Nil 120,000 165,000 80,000 380,000 (100,000) 660,000 20,000 55,000 70,000 175,000 40,000 350,000 (120,000) 590,000 Liabilities and Equity Accounts payable Bank loan Dividends payable Income tax payable Interest payable Bank overdraft Retained earnings Ordinary shares Total liabilities and equity 130,000 40,000 2,500 25,000 1,000 10,000 202,000 249,500 660,000 125,000 65,000 Ni1 40,000 Nil Nil 134,000 226,000 590,000 Summarised financial data from the statement of profit or loss for the year ended 31 December 2020 is as following: Statement of Profit or Loss for the year ended 31 December 2020 Sales Cost of goods sold Gross profit Operating expenses Interest expense Gain on sale Net profit before tax Income tax Net profit after tax RM 2,500,000 (2,100,000) 400,000 (340,000) (8,000) 50,000 102,000 (30,000) 72,000