The financial statements of Nick Scali Ltd are presented as follows:

Nick Scali Ltd

Statement of Financial Position as at 31 Dec 2017

$

$

2016

2015

Assets

Cash

55 000

38 000

Accounts receivables

69 000

27 000

Inventory

55 000

----

Prepaid expensed

5 000

7 000

Land

46 000

71 000

Equipment

194 000

69 000

Accumulated depreciation - equipment

(29 000)

(11 000)

Total

395 000

201 000

Liabilities and equity

Accounts payable

24 000

41 000

Accrued expense payable

11 000

----

Convertible notes payable

111 000

151 000

Share capital

220 000

60 000

Retained earnings

206 000

136 000

Total

572 000

388 000

Nick Scali

Statement of Profit or Loss

for year ended 31 Dec 2017

$

$

Sales

885 000

Cost of sales

460 000

Operating Expense

220 000

Interest expense

15 000

695 000

Profit before tax

190 000

Income tax expense

70 000

Profit

120 000

Additional information:

Operating expenses include depreciation expense of $35 000.

Cash dividends of $55 000 were declared and paid in 2017.

Interest expense of $12 000 was paid in cash.

Land was sold at its carrying amount for cash in 2017.

During 2017, equipment with a cost of $170 000 was purchased for cash. Equipment with a cost of $40 000 and carrying amount of $35 000 was sold.

In 2017, convertible notes of $15 000 were redeemed at their carrying amount for cash; convertible notes of $30 000 were converted into ordinary shares issued at $30 000 in total.

Ordinary shares were issues for $120 000 in cash during 2017.

Required:

statement of cash flows using the direct method. Marks will be deducted if no workings are shown