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Question 1

Condensed financial data of Erica LId Folllows.

Asseis

Cash

Accounts receivable

Inventory

Investments (long term)

Plant and Equipment

Accumulated depreciation

Total

Liabilities and Equity

Accounts payable

Accrued expenses payable

Bonds payable

Share capital

Retained earnings

Total

Erica Lid

Statement of Financial Position as at 31 December 2022

2022

185.400

161,600

243,800

169.000

620.000

(99.000)

1.280,800

125.400

24,200

280,000

500.000

351,200

1.280.800

2021

66,800

74.000

205,300

214,000

410.000

(80.000)

890.100

96.560

37,660

140,000

400.000

215.880

890,100

Erica Ltd

Statement of Financial Profit or Loss

For the year ended 31 December 2022

Sales revenue

Gain on sale of plant assets

Less:

Cost of sales

Operating expenses, excluding depreciation

Expenses

Depreciation expense

Income taxes

Interest expense

Profit

595,000

10,000

605,000

198.920

29,340

71,000

14,540

5,880

319,680

285,320

Additional information:

1. Investments were sold at cost.
2. Plant and equipment costing $72,000 were sold for $30,000.
3. A cash dividend was declared and paid during the year.

Required

Prepare a statement of cash flows for 2022 using the direct method.