PEN AND INK Limited is the largest manufacturer of stationery in Namibia. The statement ofprofit or loss, statement of changes in equity of PEN AND INK Limited for the year ended 31 December 2022, as well as the statement of financial position of the company as December 2022, are shown below: at31 PEN AND INK LIMITED Statement of profit or loss for the year ended 31 December 2022 Sales Cost of sales Gross profit Operating expenses Selling expenses Administration expenses Loss on disposal of equipment Depreciation Profit before tax Income tax expense Profit for the period PEN AND INK LIMITED Statement of Financial Position as at 31 December 2022 N$ 300,000 (200,000) 100,000 (26,000) 10,000 7,000 1,000 8,000 74,000 (29,600) 44,400 ASSETS Non- current assets 85,000 Equipment at cost 100,000 Accumulated depreciation (15,000) Current assets 109,800 Inventories 60,000 Accounts receivable 12,000 Page 18 of 23 2022 N$ 2021 N$ 80,000 89,000 (9,000) 70,500 40,000 20,000 Selling expenses paid in advance 1,200 Bank 36,600 194,800 1,500 9,000 150,500 100,000 10,000 20,000 10,000 500 10,000 150,500 Total N$ 110,000 44,400 (20,000) 10,000 144,400 EQUITY AND LIABILITIES Equity Share capital Retained earnings Non-current liabilities Loan 10,000 Current liabilities Account payable Administration expenses payable Current tax payable: income tax 20,600 800 19,000 194,800 110,000 34,400 PEN AND INK LIMITED Statement of changes in equity for the year ended 31 December 2022 Share Retained capital earnings N$ N$ Balance at 01/01/2021 100,000 10,000 Profit for the period 44,400 Dividends (20,000) Issue of share capital 10,000 Balance at 31/12/2022 110,000 34,400 Equipment costing N$15,000 was purchased during the year when certain other equipment was traded in as part of the purchase price. REQUIRED: a) Prepare the statement of cash flows of PEN AND INK LIMITED for the year ended31 December 2022 using the direct method. (20 marks) b) Prepare the note to the statement of cash flows for the reconciliation of profit before tax to cash generated from profits for the year ended 31 December 2022.