Section A (40%) - Compulsory Long Questions There are TWO questions in this section. Answer ALL questions in this section on A4 single-line papers. Explanations of the journal entries are NOT required. Correct your answers to 2 decimal places if necessary. Show your workings. Question Al The comparative statements of financial position for Sarah Production Ltd include the following information. 2020 31 December 2019 31 December $0 0 Debit balances Equity investments Motor vehicle Equipment Prepayment Inventory Accounts receivable Cash 45,000 5,000 12.000 12.250 33,500 $107,750 $3,000 29,750 20,000 6,250 9,000 10,000 13,000 $91,000 Credit balances Share capital - ordinary Retained earnings Allowance for impairment Accumulated depreciation - equipment Accumulated depreciation - motor vehicle Accounts payable Dividend payable Long-term notes payable Accrued charges $43,000 20,750 3,000 2.000 0 5,000 0 31,000 3,000 $107,750 $33,000 6,000 4,500 4,500 6,000 3,000 5,000 25,000 4,000 $91,000 Additional information during the year ended 31 December 2020: 1. Equipment that had cost $11,000 with accumulated depreciation of $4,400. During the year, it was disposed for $2,500. 2. Purchases of new equipment during the year, $36,000 were financed by paying $20,000 in cash and issuing a long-term note payable for $16,000. 3. Cash dividends paid were $5,000. 4. On 1 July 2020, the motor vehicle was completely destroyed by a flood. Insurance proceeds on the motor vehicle were $32,000. 5. Equity investments were sold at $1,700 above their cost. Required: Prepare the operating activities section of a statement of cash flows. Show ALL workings, (15 marks) m Page 3 of 10