The chief executive of Constitutional Referendum Ultimatum (CRU) Limited, a manufacturing company has received the following draft annual financial statements for the current year and is unable to determine from a reading of the statements of financial position and accompanying income statement the reasons for the changes in cash during the year. He asks you for assistance and presents the following balance sheets of the CRU Ltd.

	March 31 2019	March 31 2020	Increase (Decrease)
	Ksh000	Ksh000	Ksh000
Assets
Land	75,000	70,000	(5,000)
Buildings	280,000	405,000	125,000
Machinery	100,000	165,000	65,000
Tools	35,000	20,000	(15,000)
Trade Investments	7,500	9,000	1,500
Goodwill	100,000	Nil	(100,000)
Inventories	109,000	105,000	(4,000)
Accounts receivable	44,850	87,750	42,900
Bills receivable	13,500	10,500	(3,000)
Unexpired insurance	1,950	1650	(300)
Cash on hand	4,500	1,000	(3,500)
	771,300	874,900	103,600
Equity and Liabilities
Share capital	200,000	350,000	150,000
Accumulated profit	391,900	268,550	(123,350)
Debentures	50,000	75,000	25,000
Accounts payable	26,000	29,000	3,000
Bank overdraft		4,000	4,000
Bills payable	5,000	4,500	(500)
Short term loan	3,400	750	(2,650)
Tax payable	1,500	2,500	1000
Interest payable	3,000	5,000	2,000
Accumulated depreciation	90,500	135,600	45,100
	771,300	874,900	103,600

Additional information:

(i) There were no purchases or sales of tools during the year.

(ii) The accounts receivable balances are net of an allowance for uncollectible debts of Ksh.1,150,000 and Ksh. 2,250,000 as at 31^st March 2019 and 31^st March 2020 respectively.

(iii) An old piece of machinery that had cost Ksh.2, 250,000 on the date of acquisition was scrapped and written off the books of account. Accumulated depreciation on the machinery was Ksh.1, 650,000.

(iv) CRU Limited issued shares during the year at a discount of 10%

(v) The income statement for the current year ended 31^st March 2020 is as presented below:

Sh000.

Sales (net) 625,000

Operating charges:

Materials and supplies 125,000

Direct labour 105,000

Manufacturing overhead 90,750

Depreciation 61,750

Selling expenses 122,500

General expenses 115,000

Interest expenses 3,750

Impairment of goodwill 100,000

Decrease in the value of land 5,000

Loss on machinery 600

Discount on issue of equity shares 15,000 (744,350)

Net loss (119,350)

Required:

Prepare a statement of cash flows for CRU Limited for the year ended March 31 2020, in compliance with International Accounting Standard (IAS) number 7. Use the indirect method to determine the cash flows from operating activities. (Total 25 marks)