Resource for Question 1 Data for part (a) and (b) Effect Ltd provide the following information, in addition to the statement of changes in equity for the year ended 31 March 2020 of the question paper. 1 May 2019 A bonus issue of one ordinary share for every five ordinary shares held was made. The directors decided to leave the reserves in the most flexible form. 1 November 2019 A right issue of one ordinary share of $1 each for every six ordinary shares held wad made at a premium of $0.25 each. The right issue was fully subscribed. A final dividend of 6% was paid on each ordinary share held on this date. Profit for the year was $98 500 1 March 2020 31 March 2020 2. 2 On 31 March 2020 8% Debenture (2022) Allowance for irrecoverable debts Bank Inventory Non-current assets -carry value Tax payable Trade and other payables Trade and other receivables $ 35 000 1 200 3 100 Cr 104 500 709 800 11 200 33 750 48 000 3 You will need to use the data on the Resource Booklet to answer parts (a) and (b). 1 (a) Complete the statement of changes in equity for the year ended 31 March 2020. (7) Share premium Revaluation Retained reserve earnings Share capital (Ordinary shares of S1 each) S S 300 000 60 000 150 000 89 750 1 April 2019 Bonus issue Right issue Dividend Revaluation reserve Profit for the year 31 March 2020 180 000 1 (b) Prepare an extract of the statement of financial position at 31 March 2020 showing the equity and liabilities section only. (4) 1(c) Explain one reason why it is necessary for a limited company to prepare a statement of cash flow. (2) 1 (d) State indicating with a (x), the section of the treatment of cash flows in which each item will appear. (6) Operating Investing activities activities Financing activities Dividend paid Profit / loss on disposal of non- current asset Disposal proceeds of non-current asset Right issue Dividend received Repayment of bank loan (Total for Question 1 = 20 marks)