Al-Karam Pvt. Ltd. is a company producing garments products. Below are the companys financial statements:

Al-Karam Pvt. Ltd.

Statement of Comprehensive Income for the year ended 31 August 2020

RM

Sales revenue

10,800,000

Cost of goods sold

(3,600,000)

Gross profit

7,200,000

Operating Expenses

Administration expenses

(580,000)

Distribution expenses

(200,000)

Depreciation expense

(120,000)

Other operating expense

(600,000)

Profit before interest & tax

5,700,000

Interest expense

(540,000)

Net profit before tax

5,160,000

Income tax expense

(960,000)

Net income

4,200,000

Al-Karam Pvt. Ltd.

Statement of Financial Position as at 31 August 2020

2019

2020

RM

RM

RM

RM

Non-current Assets

Machinery

2,400,000

3,600,000

(-)Accumulated depreciation

(480,000)

1,920,000

(600,000)

3,000,000

Current Assets

Bank

300,000

360,000

Account Receivable

1,200,000

600,000

Inventory

3,300,000

4,746,000

Total Assets

6,720,000

8,706,000

Non-current Liabilities

Loan

1,920,000

2,520,000

Current Liabilities

Accounts Payable

360,000

540,000

Operating expenses payable

126,000

132,000

Shareholders Equity

Ordinary share capital

1,914,000

1,914,000

Retained earnings

2,400,000

3,600,000

Total Liabilities & Equities

6,720,000

8,706,000

Required:

(a)

1 Compute the collections from customers.

2 Compute payments for merchandise inventory.

3 Compute payments of operating expenses.

4 Compute the acquisitions of Machinery.

5 Compute the amount of borrowing, with Al-Karam paying no long-term liabilities.

6 Compute the cash payment for interest expense.

7 Compute the payment of cash dividends.

(b) Briefly explain the three purposes of the statement of cash flows.