QUESTION TWO (20 marks in total...2 parts to the question) A summarized comparative statement of financial position of Ba Ltd is presented below together with a statement of Profit and Loss and other comprehensive income for the year ended 30 June 2014. OB CB Description 30 June 2013 (S) 30 June 2014 (8) Cash 45 000 35 000 Trade receivables 69 000 105 000 Allowance for doubtful debts (3 000) (6 000) Inventory 45 000 67 000 Available-for-sale investments 53 000 60 000 Plant 187 000 225 000 Accumulated depreciation (35 000) (53 000) $361 000 $433 000 Accounts payable 65 000 75 000 Accrued interest 5 000 7 000 Current tax payable 15 000 18 000 Deferred tax 30 000 37 000 Borrowings 80 000 100 000 Share Capital 100 000 100 000 Investment revaluation reserve 2 000 7 000 Retained earnings 64 000 89 000 S361 000 $433.000 Statement of Profit and Loss and other Comprehensive Income for the year ended 30 June 2014 int Statement of Profit and Loss and other Comprehensive Income for the year ended 30 June 2014 int Description Sales Cost of sales Gross Profit 1 035 000 (774 000) 261 000 Distribution costs Administration costs Interest Expense Profit before tax Income tax expense Profit for the year (76 000) (96 000) (7 000) 82 000 (24 000 58 000 Other Comprehensive income Gain on revaluation of investments (net of tax) Total comprehensive income AD 5 000 $63 000 370 Additional information i. The movement in the allowance for doubtful debts for the year comprises: Balance at 30 June 2013 $3 000 Doubtful debts for the year 5 000 Bad debts written off (2000) Balance at 30 June 2014 6 000 ii. Available-for-sale investments are valued at fair value, with increments/decrements being recognised in the investment revaluation reserve until investments are sold. iii. There were no disposals of plant during the year. iv. A dividend of $33 000 was paid during the year. There were no acquisitions or disposals of investments during the year. Required: a) Discuss two purposes of the statement of cash flows. (4 marks) b) Using the direct method of presenting the cash from operating activities, prepare a statement of cash flows in accordance with IAS 7 for the year ended 30 June 2014. (16 marks) V