Shown below is an extract from the comparative statements of financial position and statement of profit or loss of Red Ltd for the year ended 30 June 2021: Red Ltd Statement of Financial Position as at 30 June 2021 2021 2020 CURRENT ASSETS $ $ Cash 25,000 74,600 Accounts Receivables 139,700 123,800 Inventory 287,500 233,700 452,200 432,100 NON-CURRENT ASSETS Equipment 343,700 343,700 Accumulated Depreciation - (96,900) 246,800 (67,000). 276,700 Equipment Buildings 695,500 351,500 Accumulated Depreciation- (116,900) 578,600 (97,600) 253,900 Buildings Land 51,500 51,500 Long Term Investments 82,500 172,500 959,400 754,600 TOTAL ASSETS 1,411,600 1,186,700 CURRENT LIABILITIES Bank Overdraft Accounts Payable Accrued Salaries and Wages Current Tax Liability 29,200 227,500 23,000 38,500 318,200 0 230,500 26,500 36,500 293,500 NON-CURRENT LIABILITIES Loan Payable Debentures due 1/9/2024 162,500 212,500 375,000 693,200 162,500 212,500 375,000 668,500 TOTAL LIABILITIES Share Capital Retained Earnings 614,600 103,800 718,400 1,411,600 400,600 117,600 518,200 1,186,700 TOTAL LIABILITIES AND EQUITY Red Ltd Statement of Profit or Loss for the year ended 30 June 2021 Sales Less: Cost of Sales Gross Profit 888,100 (537,800) 350,300 Add: Other Income: Gain on Sale of Investment 35,000 Less: Operating Expenses: Salaries and Wages Other Expenses Depreciation Expense Interest Expense Profit before Tax Income Tax Expense Profit for the year (152,500) (61,900) (49,200) .(52,500) 69,200 (24,510) 44,690 Additional information a. Management decided to display interest and dividends received under "investing activities, interest paid under operating activities and dividends paid under financing activities. b. Additions to the buildings were paid in cash. c. Long Term Investments with a carrying amount of $90,000 were sold for $125,000 cash. d. Dividends were paid during the year in cash. e. Shares were issued for cash. Required 1. Prepare the statement of cash flows of Red Ltd based on the direct method of presentation. (8 marks) 2. Prepare a note reconciling the net cash flows from operating activities with the profit for the year. (6 marks)