Harrys Hardware had the following cash transactions over the financial year ending 30 June 2021. Opening cash balance, 1 July 2020, was $5,390, closing cash balance, 30 June 2021, was $6,095.

Transaction	Amount
Owners Contribution	$30,000
Payment to employees	$6,280
Sold equipment	$12,000
Cash sales	$80,275
Drawings	$3,500
Paid bank interest	$460
Purchased motor vehicle	$70,000
Paid supplies for inventory	$40,080
Income Tax paid	$1,250

Required:

1. Prepare a Cash Flow statement for Harrys Hardware for the year ending 30 June 2021 using the information provided.

[9 marks]

2. Explain why sales made on credit terms are not included in the Cashflow Statement. Your answer should include an explanation of the difference between accrual and cash accounting.

[6 marks]

[Total for Question 21 = 15 marks]