Balance Sheet extracts for Sharpy Ltd at 31 May 2021 and 31 May 2020 are as follows: Additional information: (1) Ordinary shares have a nominal value of 1.75 each. 10.50 (2) Ordinary share dividends were paid during the year at a rate of 10.5c per share based on share capital at 31 May 2020. (3) A non-current asset with a net book value of 25,470 was sold during the year at a loss of 5,094. (4) A non-current asset was purchased during the year for 123,645. (5) A debenture loan was repaid in full on 1 March 2021. (6) Taxation on profit for the year ended 31 May 2021 was estimated to be 12,600. (7) Land and buildings were revalued during the year. (8) Profit after tax for the year was 82,241. REQUIREMENTS: (a) Prepare a 'statement of cash flows' for the year ended 31 May 2021 for Sharpy Ltd, using the indirect method, in accordance with IAS 7 Statement of Cash Flows. (15 Marks) (All workings should be clearly shown.) (b) Based on the 'statement of cash flows' you have prepared in part (a) above, explain how it is possible for a business to make a profit but have a decrease in cash resources. Use examples from the statement of cash flows to support your answer. (5 marks) (Total marks: 20 marks)