The following additional information was provided:

(a) All sales and purchases of inventories were on account.

(b) Accounts Payable pertains to inventory creditors.

(c) New plant costing $170,000 was purchased for cash during the year. The old plant

was sold for cash, resulting in a loss of $6,000.

(d) Investments were purchased for cash during the year.

(e) Notes with a face value of $60,000 were converted into $60,000 of ordinary shares.

(f) Additional shares were issued for cash during the year.

(g) A cash dividend was declared and paid during the year.

Required:

For the purpose of this question, please ignore GST, but show ALL your workings.

i. Prepare a Statement of Cash Flows for Palm Ltd for the year ended 30 June 2018 using the direct method.

ii. Prepare a reconciliation of net profit after tax to net cash provided from operating activities.

Palm Ltd Comparative Statements of Financial Position as at 30 June 2017 2018 Assets $70.000 106,000 Cash at Bank $144,000 Accounts Receivable (net) 170,000 Inventories 240,000 264.000 50,000 Prepaid Operating Expenses 38,000 Investments 180,000 620,000 150,000 Plant 500,000 Accumulated Depreciation - Plant (130.000 $1.262.000 (120.000) $1.020.000 Total Assets Liabilities and Shareholders' Equity $176,000 $140,000 Accounts Payable Operating Expenses Payable Interest Payable Income Tax Payable Notes Payable Share Capital Retained Eamings Total Liabilities and Shareholders' Equity 58,000 48,000 4,000 3,000 6,000 260,000 490,000 7,000 320,000 340,000 268.000 162.000 $1.262.000 $1020.000 Palm Ltd Statement of Profit or Loss for the Year Ended 30 June 2018 $960,000 Sales Less: $580,000 120,000 34,000 Cost of Sales Operating Expenses (exchuding Depreciation) Depreciation Expense Interest Expense Income Tax Expense 36,000 30,000 Loss on Sale of Plant 6.000 (806.000) $154.000 Profit after Tax