Question 1 Listed below are the financial statements of Mountain Bike Tours Ltd. Mountain Bike Tours Ltd Statement of financial position as at 31 December 2022 Assets 2022 $ 2021 $ Cash 30,000 13,000 Accounts receivable 18,000 14,000 Inventory 34,000 35,000 Equipment 70,000 78,000 Less: Accumulated depreciation -30,000 40,000 -24,000 54,000 Total $122,000 $116,000 Liability and equity Accounts payable Income tax payable Debentures payable Share capital Retained earnings Total 29,000 33,000 15,000 20,000 15,000 10,000 30,000 25,000 33,000 28,000 $122,000 $116,000 Mountain King Tours Ltd Statement of profit or loss for the year ended 31 December 2022 $ $ Sales 250,000 Less Cost of sales -180,000 Gross Profit $70,000 Less Operating expenses Selling expenses 28,000 Administration expenses 16,000 -44,000 Net profit before interest & tax $26,000 Less interest expense -2,000 Net profit before tax $22,000 Less income tax Net profit after tax (NPAT) -7,000 $17,000 I The following additional data were provided. 1. Dividends of $12,000 were declared and paid. 2. During the year equipment was sold for $10,000 cash. The equipment cost $15,000 originally and had a carrying amount of $10,000 at the time of the sale. 3. All depreciation expense, $11,000, is in the selling expense category. 4. All sales and purchases are on account. 5. Additional accessories for the climbing equipment were purchased for $7,000 cash. The accessories are reported as part of the asset, climbing equipment. 6. Accounts payable pertains to inventory creditors. Inventory comprises food and liquor sold on tours. 7. All operating expenses except depreciation are paid in cash. Required: (a) Prepare the statement of cash flow using the direct method.