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Recent financial statements for Emerald Limited appear below as well as income statement for the latest year.

Emerald Statement of Financial Position 2020 and 2021 May 31
	2020	2021
Assets
Cash	24 000	22 300
Accounts receivables	7 500	6 400
Inventories	30 100	39 900
Long-term investments	8 000	--
Plant and equipment	120 000	132 500
Accumulated depreciation	(46 800)	(50 800)
Total Assets	142 800	150 300
Capital and Liabilities
Capital and reserves:
Common stock	100 000	108 000
Retained earnings	38 600	38 600
Current Liabilities
Accounts payables	2 400	1 600
Accrued liabilities	1 800	2 100
Total Assets and Liabilities	142 800	150 300

Emerald Limited Income Statement for Year Ended 2021 May 31

Sales ...................................... $102 000

Less cost of goods sold ......... 73 000

Gross margin ......................... 29 000

Less operating expenses ........ 14 000

Income before taxes .............. 15 000

Less income taxes ................. 4 500

Net income ............................ 10 500

NB.

The long-term investment was sold for $8 000 cash.

Dividends of $10 500 were declared and paid during the year.

Required:

1. A statement of cash flows for Emerald for year ended 2021 May 31.

Use the indirect method.

2. Explain briefly TWO (2) ways in which a statement of cash flow is of use to a potential

investor in Emerald Limited.

Answer & Explanation Solved by verified expert

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