Tasmanian Dairy Pty Ltd had the following cash transactions over the financial year ending 30 June 2021. Opening cash balance, 1 July 2020, was $6,529, closing cash balance, 30 June 2021, was $26,225.

Transaction	Amount
Acquisition of building	$575,000
Received loan funds	$350,000
Payment to employees	$62,800
Income Tax paid	$3,250
Sold machinery	$120,000
Paid dividends	$5,000
Paid bank interest	$529
Paid supplies for inventory	$209,075
Cash sales	$405,350

Required:

1. Prepare a Cash Flow statement for Tasmanian Dairy Pty Ltd for the year ending 30 June 2021 using the information provided.

[9 marks]

2. The statement of cash flows classifies cash flows for an accounting period into three classifications. Provide an explanation for each of the classifications.