BFA507 The Accounting Framework Question 5 The following statements have been prepared for the company Arrows Ltd for the year ending 30 June 2021. Balance Sheet of Arrows Ltd As of 30 June 2021 2021 2020 Current assets Cash at bank 67 912 27 202 Accounts receivable 15 363 25 645 Inventory 32 560 35 230 Prepaid operating expenses 6 150 4 250 Total current assets 121 985 92 327 Non-current assets Plant & equipment 177 600 102 850 Accum. Deprec. - plant & equipment (45 790) (33 520) Land 320 500 220 000 Total non-current assets 452 310 289 330 Total assets 574 295 381 657 Current liabilities Accounts payable 59 500 63 500 Accrued expenses 35 200 21 500 Provision for tax 28 560 15 200 Total current liabilities 123 260 100 200 Non-current liabilities Long term loan 300 500 186 400 Total non-current liabilities 300 500 186 400 Total liabilities 483 760 286 600 $150 535 $95 057 Net assets Shareholders' equity 80 000 70 000 Share capital 70 535 25 057 Retained profits Total shareholders' equity $150 535 $102 057 BFA507 The Accounting Framework Sales 402 410 Less Cost of goods sold Gross profit 200 820 201 590 Less other expenses Administration expense Salary expense 18 250 26 400 Depreciation expense 33 100 Interest expense 4 512 Loss on sale of plant and equipment 3 100 Total expenses 85 362 Profit before tax 116 228 Less Income tax expense Profit after tax (33 200) $83 028 Statement of Changes in Equity Shareholders' Equity at 01/07/20 Net profit 95 057 83 028 Dividends declared and paid (37 550) $150 353 Shareholders' Equity at 30/06/21 Additional information The following took place during the year ended 30 June 2021: 1 A dividend of $37 550 was declared and paid. HI Plant and equipment was purchased for cash. In addition, plant and equipment with a cost of $65 000 was sold for cash during the year. iv A loan of $140,000 was taken out in July 2020 and some of the other loan was repaid during the year. There were no other borrowings apart from this loan. V Land was sold for cash and some land was purchased for $254 000 cash. There were no other issues of shares for cash. Required: Complete a cash flow statement for the year ended 30 June 2021. [12 marks] b. Comment on Arrows's cash flow statement whether the business maintains a strong cash flows management in operating, investing and financing activities? Suggest any improvement that is necessary for a sustainable cash flow management. [3 marks] [Question 5: 15 marks] [Section B: 35 marks] -End of exam paper- Income Statement of Arrows Ltd for the year ended 30 June 2021