QUESTION 4: Denny Limited reports the following for the year ended 30 April 2021:- Denny Ltd Statement of Financial Position as at 30 April 2021 2021 2020 Notes Non-Current Assets (0) 32.000 36,000 Current Assets Inventory 30,800 24,000 Trade Receivables 37,000 44,800 Cash and Bank Balance 19.000 10,000 Total Current Assets 86.800 78.800 Current Liabilities Trade Payables 1,600 24,600 Other payables and accruals 4,000 5,000 Taxation 1,000 4,000 Short term loan 20.000 30.000 Total Current Liabilities 26.600 63.600 Net Current Assets 60.200 15,200 Total Assets 92.200 51,200 Financed by: Share Capital 50,000 40,000 Retained Earnings 42.200 11.200 92.200 51.200 Denny Limited Statement of Profit or Loss for the year ended 30 April 2021 Sales 370,000 Cost of Sales (222.000) Gross Profit 148,000 Administrative Expenses (101.000) Operating profit 47,000 Other Income - Profit on the disposal of Non-current assets 4,000 Finance Costs - Interest (3.000) Profit before taxation 48,000 Taxation (17,000) Profit after Taxation 31,000 Notes to the accounts: i) Non-Current Assets Cost: Opening balance Addition Disposal Closing balance 90,000 20,000 (10.000) 100.000 Depreciation: Opening balance Charge for the year Disposal Closing balance 54,000 20,000 (6.000) 68,000 Net Book Value 32.000 ii) Taxation: Opening balance Charge for the year Payments during the year Closing balance 4,000 17,000 (20.000) 1.000 ii) Short Term Loan: Opening balance Interest charged Repayment Closing balance 30,000 3,000 (13.000) 20.000 REQUIRED: a) Prepare a statement of cash flow for the year ended 30 April 2021 for Denny Ltd using the indirect method. (20 marks) b) Mark, a director of Denny Ltd, cannot understand why the increase in cash for the year ended 30 April 2021 is not the same as the profit made for the same period. Outline the reasons why there is a difference