Tuas Ltd reports the following information for the financial year ended 31 December 2017.

(i) $$

Revenue Cost of goods sold Gross profit Operating expenses

Depreciation expense

Other expenses Total operating expenses Profit before tax Income tax expense Net profit

(ii)

475,750 (179,500) 296,250

(42,000) (85,500)

(127,500) 168,750 (33,750) 135,000

31 December December

2017 $

Accounts receivable Accounts payable Accrued expenses Inventories 951,000 Prepaid expenses 4,800

2016 $

121,500 254,000 6,000 701,500 5,400

Total current assets

The directors are proposing to declare and pay a dividend of $67,500.

Required:

1. (a) Prepare the operating activities section of Tuas Ltd's 2017 statement of cash flows using the indirect method.

   (9 marks)

2. (b) Examine the cash flows and comment on the wisdom of the proposed payment of cash dividend.

   (10 marks)

Question 4 Tuas Ltd reports the following information for the financial year ended 31 December 2017. 475,750 Revenue Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses Total operating expenses (179,500) 296,250 (42,000) (85,500) (127,500) Profit before tax 168,750 Income tax expense Net profit (33,750) 135,000 31 December December 31 2017 2016 Total current assets Accounts receivable 160,500 121,500 Accounts payable 233,500254,000 Accrued expenses 10,500 6,000 Inventories 951,000701,500 Prepaid expenses 5,400 4,800 The directors are proposing to declare and pay a dividend of $67,500 Required: Prepare the operating activities section ofTuas Ltd's 2017 statement of cash flows using the indirect method (a) (9 marks) (b)Examine the cash flows and comment on the wisdom of the proposed payment of cash dividend (10 marks)