QUESTION 3 (25 Marks) Car Battery World Trading Ltd ('Battery World') is a global car battery supplier based in Omaruru, Namibia. The company financial accountant, Rosemary Blue, is currently in the process of preparing the annual financial statements for the 30 September 2019 financial year end. Reconciliation of net profit' to 'cash generated from operations. In his preparation of the statement of cash flows, Rosemary correctly prepared the following reconciliation profit before tax to cash flows from operating activities: Net profit before tax 505 450 Adjustments Depreciation ? Profit on sale of asset (27 500) Interest Income (36 700) Working capital changes Increase in trade receivables (68 000) Decrease in inventory 18 000 Increase in trade payables 49 800 Cash generated from operations ? Additional information: 1) Net profit after tax in the income statement amounts to N$ 463 050. There was no tax liability at year end. 2) The trial balance on 30 September 2018 included the following balances: Inventory N$ 96 000 Trade receivables N$ 134 550 Trade payables N$ 65 940 Taxation payable N$ 34 180 Bank N$ 73 020 3) Total sales for the year came to N$4 480 000, 40% of which were on credit. 4) Battery World sells widgets at a 60% mark-up on cost. 5) N$12 300 was written off as bad debts in the current year. 6) In order to finance the purchase a new machine, Battery World issued 10 000 ordinary shares at a price of N$ 60 per share on 31 March 2019. The number of shares issued amounted to half of the number of shares already in issue. 7) On 30 April 2019, the old battery - producing machine was replaced with a bigger and better model. The old machine had been purchased on 1 January 2017 at a cost of N$480 000. This machine had been expected to produce 90,000 batteries and have a residual value of N$30 000. These expectations did not change throughout the machine's useful life. By 30 September 2018 the old machine had produced 59,500 batteries while a total of 76,500 batteries had been produced on the date that this old machine was sold. On the same day a bigger machine costing N$725 000 was purchased, installed and paid for. This machine had an estimated residual value of N$50 000 and was expected to produce 270.000 batteries. By 30 September 2019 this machine had produced 68,000 batteries. 8) The only other asset that Battery World d owns is a delivery vehicle which it purchased on 30 June 2017 for N$180 000. This vehicle has a residual value of N$15 000 and is depreciated on a straight line basis at 20% per annum. 9) The company declared and paid two dividends during the year: An interim dividend of N$1,50 per share on 30 December 2018; and A final dividend of N$2,50 on 30 September 2019. REQUIRED 1. Prepare the statement of cash flows of Battery World for the year ended 30 September 2019 using the direct method, to conform to the requirements of IAS 7 (20 Marks) 2. Prepare the following notes to conform to the requirements of IFRS: Reconciliation of profit before tax to cash generated from operations