The following is a list of amounts taken from the records of Lilly Lavender's, a flower sale

and arranging service, for the year to 31/12/20X1.

Advertising expense 21,000

Buildings (purchased 2005) 220,000

Capital (buildings) contributed by the owner 110,000

Capital, start 78,000

Cash invested by Lilly from inheritance 35,000

Cash Drawings 90,000

Cash Receipts from Customers 785,000

Cash - Bank balance, start of year 6,000 overdrawn

Commission Revenue 29,000

Commission received in cash 19,000

Cost of Goods Sold 333,000

Depreciation - Building 24,000

Depreciation - Equipment 4,000

Discount (from suppliers for prompt payment) 8,000

Equipment (purchased 2005) 50,500

Interest expense 40,000

Interest paid 35,000

Interest received in cash 14,000

Interest revenue 15,700

Loan (6 months) obtained from ANZ 10,000

Loan (6 months) repaid to ANZ 10,000

Mortgage obtained from BNZ 65,000

Mortgage repaid (principal) 165,000

Other operating expenses 34,000

Payments to Suppliers 373,000

Purchase of New Buildings for cash (current year) 280,000

Purchase of shares in Telecom for cash 26,000

Sale of Jones Ltd shares for cash 131,000

Sale of Old Buildings for cash 96,000

Sales 900,000

Tax expense 112,000

Tax paid 123,000

Term Deposit (opened mid-year) 20,000

Wages expense 85,000

Wages paid 80,000

Required:

a) Cash Flow Statement for the year ending 31 December

20X1. (Note: some items listed are not cash flow items.)

b) Comment on Lilly's cash flows, in regard to operating, investing and financing

activities, the ending cash bank balance, and any items you consider are relevant.

c) Assume Lilly's net profit on her Income Statement is $240,000. Compare this with the

final net operating cash flow for the business and suggest reasons for the difference.

d) Make 3 recommendations to Lilly in regard to her cash flows and cash position.