Topic 11: Statement of Cash Flows Homework Questions Question 1 The following information is taken from the financial statements for Lavender Ltd for the year ended 30 June 20X5. Extract from the Income Statement is as follows $ Sales revenue 45,000,000 Cost of sales 30,000,000 Gain on sale of plant and equipment 200,000 Administrative expenses 4,000,000 Distribution costs 6,100,000 Other expenses 300,000 Interest expense 250,000 Income tax expense 1,150,000 The of Financial Position is as follows: Bank Accounts receivable Allowance for doubtful debts Inventory Prepaid assets Plant and equipment Accumulated depreciation Land Accounts payable Accrued interest Other accrued liabilities Current tax payable Dividends payable Borrowings Share capital Reserves Retained earnings 20X5 20X4 $ $ 2,000,000 2,500,000 4,686,000 5,344,000 (93,000) (107,000) 6,836,000 7,094,000 330,000 362,000 23,018,000 22,728,000 (6,306,000) (5,564,000) 11,956,000 11,195,000 5,417,000 6,057,000 200,000 250,000 2,325,000 2,030,000 1,250,000 1,310,000 4,000,000 4,220,000 5,000,000 6,250,000 21,500,000 20,565,000 500,000 370,000 2,235,000 2,500,000 Share capital Reserves Retained earnings 21,500,000 500,000 2,235,000 20,565,000 370,000 2,500,000 . . Additional information: Profit before tax for the year ended 30 June 20X5 was $4,550,000. Plant that was sold during the year had a cost of $500,000 and accumulated depreciation of $258,000 Included in the expenses for the year were depreciation of $1,000,000 and doubtful debts of $900,000. A transfer of $130,000 was made from retained earnings to reserves during the year. Accounts payable relate only to inventory. The tax rate is 30% per annum. . Required: Prepare a statement of cash flows for Lavender for the year ended 30 June 20x5 that is prepared using the requirements of AASB 107 Statement of Cash Flows using the direct method for determining Cash Flows from Operating Activities