Question 1: (a) Why might a company's operating profit in a particular period be different from its cash flow from operations? (b) Is cash flow more reliable than accounting profit? Which one is more useful? Question 2: Following information relate to Hawke Ltd for the financial year ended 2017 Hawke Ltd Statement of Financial position As at 30 June 2017 2017 2016 Assets Cash at bank 84200 100000 Accounts receivable 208000 172000 Inventory 200000 208000 Prepaid insurance 12000 20000 Interest receivable 400 600 Investments 80000 40000 Plant and equipment 800000 720000 Less: Accumulated depreciation -200000 -180000 Total assets 1184600 1080600 Liabilities Accounts payable 152000 128000 Provision for employee benefits 24000 16000 Other expenses payable 8000 12000 Equity Share capital 800000 800000 Retained earnings 200600 124600 Total liabilities and equity 1184600 1080600 Hawke Ltd Statement of Financial performance For the period ended 30 June 2017 2017 Income Sales revenue $1,920,000 Interest revenue on investments $4,000 $1,924,000 Less: Expenses Cost of sales $1,344,000 Employee expenses $260,000 Insurance expense $32,000 Loss on sale of equipment $8,000 Depreciation expense - plant and equipment $80,000 Other expenses $44,000 $1,768,000 Profit for the year $156,000 Additional information The loss on sale of equipment relates to an item that originally cost $80 000 and had a carrying amount of $20000 when sold. Required: Calculate the following: (i) Cash collected from customers (ii) Cash paid to suppliers (iii) Cash paid to employees for wages and salary (iv) Cash spent on plant and equipment (v) Proceeds from sale of equipment (vi) Cash paid for insurance Question 3: Wilko Ltd had cash and cash equivalents at 1 July 2016 of $100 000. The transactions of Wilko Ltd for the year to 30 June 2017 are as follows: 1. Received $380 000 cash for customer accounts 2. Invested $100 000 cash on the short-term money market 3. Sold for $40 000 cash a plant asset with a carrying amount of $30 000 4. Issued ordinary shares for $120 000 cash 5. Cash payments for suppliers accounts $250 000 6. Purchased a plant asset for $87 000; $27 000 in cash and $60 000 vendor loan 7. Insurance expense shown in the income statement is $14000. At the end of the year the balance sheet shows prepaid insurance expense of $7000. There was a prepaid insurance expense of $6000 at the beginning of the year. 8. Exchanged 10 000 shares for land with a fair value of $100 000 9. Received a $40 000 dividend in cash 10. Paid fixed-term loan principal of $80 000 and interest of $8000 11. Dividend paid during the period $20000 12. Borrowed $30 000 with a 6-month loan payable Required Prepare the statement of cash flows of Wilko Ltd for the year to 30 June 2017.