Question B4 The following data are extracted from the financial statements of Lala Company: Income Statement: 2020 $24,200 Profit Gain/Loss on sale of machine Depreciation expense Amortization expense of patent 13,500 9,000 Statement of Financial Position: 30 June 2020 30 June 2019 Cash Accounts receivable Inventory Interest payable Accounts payable 137,200 353,200 39,100 218,100 $310,000 119,700 400,000 51,200 185,800 Additional Information: (1) Made a loan of $30,000 to the ABC Company. (2) Repaid a 3-year loan of $100,000 to Hang Seng Bank. (3) Sold the old machine at cash of $122,500 (the cost of the machine is $175,500 and the accumulated depreciation at disposal was $55,000). (4) Purchased a new machine for cash at $300,000. (5) Paid cash dividend of $0.15 per share for the 220,000 ordinary shares issued and outstanding. Required: (a) Prepare the statement of cash flows for the year ended 30 June 2020 using the indirect method for LaLa Company. (12 marks) (b) In preparing the statement of cash flows under indirect method, state how to deal with a gain on sale of property, plant and equipment? Give one reason to support your answer. (2 marks) Which section of business activities in the statement of cash flow is least likely to show positive net cash flows in a successful and growing business? (1 mark) Page 11 of 11