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Question 6 The owner of the Vegan Cake Shop' expanded her cake business of many years, by investing in new equipment during the year ended

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Question 6 The owner of the Vegan Cake Shop' expanded her cake business of many years, by investing in new equipment during the year ended 31 December 2021. This was an excellent investment as her profit after interest for the year was 33,000, and the new equipment only cost her 5,000. She took out a loan to purchase the equipment, but doesn't have to pay it off for two years. Interest of 5% was owed but not paid on the loan during the year. She didn't want to use the cash in her business to buy the new equipment despite having a healthy cash balance at the start of the year (1 January 2021) of 15,000. She doesn't know what her cash balance is at 31 December 2021 and she would like you to work it out, before she takes out any drawings She charged a full year's (straight line) depreciation on her new equipment and expects it to have a life of 10 years, with 1,000 scrap value at the end. She also managed to free up some kitchen space by selling off all her old equipment, which had a net book value of 2,000, for cash of 2,600. No depreciation is charged in the year of sale. During the year, she noticed that her cake sales increased rapidly, particularly the sales she made on credit. Her year-end Trade Receivables figure for 31 December 2021 is 2,000 higher than the previous year-end figure. This was not an issue for her as she managed to also increase her year-end Trade Payables figure by 5,000 compared to the previous year, despite keeping her inventory levels constant throughout the year. There are no other notable movements in the Statement of Financial Position other than those mentioned above. Required Set out a Cash Flow Statement (using the indirect method) for the Vegan Cake Shop for the year ended 31 December 2021 using only the information given above. Use the statement to work out the cash balance figure that would go into the SOFP as at 31 December 2021. Total 10 marks END OF QUESTIONS

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