QUESTION 2 (10 Marks)

The following transactions were undertaken by ABC Pty Ltd during the financial year ended 30 June 2019.

1. Sold for $12,000 used machinery with a carrying amount of $75,000.
2. Issued ordinary shares for cash, $300,000.
3. Purchased land to be held for future expansion for $220,000.
4. Paid off a long-term $90,000 loan plus interest of $8,000.
5. Purchased machinery, giving $50,000 cash and signing a mortgage loan for $90,000.
6. Purchased shares in A Ltd to be held as an investment for $100,000 cash.
7. Sold a long-term government bond, with a carrying amount of $45,000, for $56,000, including $5,000 accrued interest.
8. Purchased shares in Rouge Ltd to be held as a long-term investment, paying $170,000 cash.
9. Issued 7% debentures for $500,000
10. Paid cash dividends of $60,000

Required:

1. Prepare the net cash flow used in investing activities section of the statement of cash flows. Must show your calculations (3 marks)
2. Prepare the net cash flow used in financing activities section on the statement of cash flows. Must show your calculations (3 marks)
3. What are the limitations of a statement of cash flows? Explain. You must disclose the source of your information by referencing and support your statements by readings and research. (4 marks)