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QUESTION 5 Cash and Accrual Accounting (16 Marks) Dandelion Tea Ltd's financial records included the following information: Discount received from suppliers Cash purchase of Equipment

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QUESTION 5 Cash and Accrual Accounting (16 Marks) Dandelion Tea Ltd's financial records included the following information: Discount received from suppliers Cash purchase of Equipment Cash received from customers who were sold goods on credit Interest revenue (Interest received $7,000) Depreciation on Equipment for the year ending 31 March 2020 Wages and Salaries expense ( Wages and Salaries paid $103,000) Interest on loan paid by Dandelion Tea during the year Dividends paid to Shareholders in Dandelion Tea Ltd Loan principal repayment made by Dandelion Tea Credit Sales Cash received from the sale of equipment Cost of Goods Sold Cash borrowed by Dandelion Tea by way of Loan Payments made to suppliers for inventory purchased on credit Cash received from issue of Shares in Dandelion Tea 3,000 83,000 350,000 8,000 37,000 104,000 9,500 22,000 38,000 450,000 18,000 284,000 57,000 319,000 31,000 You are required to: a. Calculate the Net profit made by Dandelion Tea Ltd, for the period ending 31 March 2020. Showing all your working (52) b. Calculate Dandelion Tea's bank balance as at 31 March 2020, given that Dandelion Tea had an opening cash balance of $83,000 on 1 April 2019. Show separately the net cash flow for Dandelion Tea's Operating, Investing and Financing Activities. (7172) c. Using your answers to a, and b. above provide at least two reasons to explain why there is a difference between the change in Dandelion Tea's cash balance and its Net Profit. (2) d. Explain why there is a difference between the amount of Interest revenue reported by Dandelion teas and the cash received by the company for interest. (4) e. Can Dandelion Tea Ltd continue to operate in its current manner? Using the calculations you have made and Dandelion Tea's financial records, give a reason for your answer. (%)

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