Below are extracts from the statement of profit & loss and statement of financial position of a company. Operating profit BWP 70,000 Income from investments 2,000 Finance costs (9,000) Profit before tax 63,000 Tax Charge (22,000) Profit after tax 41,000 Other comprehensive income Revaluation gain 30,000 Total comprehensive income 71,000 Closing Balance (BWP) Opening Balance (BWP) Current assets Inventory 27,000 23,000 Receivables 18,000 25,000 Current liabilities TAdditional Information: i. Depreciation charge for the year was P40,000. ii. P700,000 were the receipts from customers and also for cash sales. P353,000 was paid to suppliers, other operating cash payments were P110,000 and cash paid on behalf and to employees was P120,000. iii. Interest paid and taxation paid were P11 000 and P14,000 respectively Additional Information: i. Depreciation charge for the year was P40,000. ii. ii. P700,000 were the receipts from customers and also for cash sales. P353,000 was paid to suppliers, other operating cash payments were P110,000 and cash paid on behalf and to employees was P120,000. iii. iii. Interest paid and taxation paid were P11 000 and P14,000 respectively

Required: a. Prepare the operating activities section of the statement of cash flows using:

i. The direct method. (9 marks)

ii. The indirect method. (9 marks)

b. If the finance cost shown above was for a loan which was taken on 01 October 2019 at an interest rate of 7.5%, calculate the capital amount.

c. From the above statement of Financial Position explain the likely cause of the following: i. The increase in inventory. (3 marks) ii. The decrease in receivables. (2 marks) iii. The increase in payables. (2 marks)