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The following information has been extracted from the financial records of Lucy Ltd: 31 March 2021 $1 500 6 345 320 7 000 20 Dr 55 025 16 000 900 7 492 10 As at: Cash Accounts receivable Allowance for DD Inventory GST receivable/payable Plant and equipment - at cost Accumulated Depreciation Bank overdraft Accounts payable Interest expense payable Dividends payable Income tax payable Long-term borrowings Share capital Retained earnings For the year ended 31 March 2021: Sales Cost of goods sold Operating expenses Doubtful debts expense Interest expense Depreciation expense Loss on sale of plant and equipment Tax expense 31 March 2020 $275 5 600 290 7 240 81 Cr 50 000 13 500 200 5 396 15 70 30 150 200 3 000 15 000 26 818 9 000 34 533 $70 000 48 000 24 690 310 165 3 200 500 400 Additional information: 1. Lucy Ltd uses the indirect method for reporting cash flows from operating activities. 2. The entity classifies dividends paid and interest paid as cash flows from financing activities. 3. An item of equipment was sold for $2,000 cash. Required: Reconstruct the Lucy Ltd general ledger accounts and journal entries provided in the an- swer booklet. (11) Prepare the Statement of Cash Flows for Lucy Ltd, in accordance with NZ 14S 7 State- ment of Cash Flows, for the year ended 31 March 2021. (111) Prepare the Statement of Cash Flows for Lucy Ltd, in accordance with NZ 14S 7 State- ment of Cash Flows, for the year ended 31 March 2021 but assume Lucy Ltd uses the direct method for reporting cash flows from operating activities. (iv) Review the two SCF's, and state three significant concerns of Lucy Ltd. Explain your concerns. In Question 1, Lucy Ltd classified interest expense paid, and dividends paid as cash flows from financing activities. What if Lucy Ltd had used the alternative classification for these two items? Complete the table in the answer booklet to illustrate the effect of using a different classifica- tion, for these two items, on the Statement of Cash Flows and note. Ensure you provide detail of the parts of the CFOA (and Reconciliation) affected. For ex- ample: 'After the cash generated from operations' line
