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The financial statements of Dobson Ltd are provided below.

Dobson Ltd. Balance Sheet as at 30 June

	2021	2020
Assets	$000	$000
Cash at bank	60	30
Trade receivables	250	218
Allowance for doubtful debts	(50)	(42)
Inventories	450	480
long term investments	10	10
Building - at cost	600	600
Accum depreciation- buildings	(90)	(60)
Plant & equipment - at cost	505	480
Accum  depreciation - plant & equip.	(100)	(80)
Deferred tax asset	23	13
TOTAL ASSETS	1,658	1,649
Liabilities and equity
Accounts payable	294	322
Accrued Expenses	25	45
Interest payable	12	6
Dividend payable	15	0
Current tax liability	37	35
Deferred tax liability	12	1
Mortgage	430	330
Share capital	400	400
Retained earnings	433	510
Total liabilities and equity	1,658	1,649

 

 

Dobson Ltd

Income Statement

for the year ended 30 June 2021 

	$000
Sales (all sales are credit sales)	750
Interest received	3
Gain on sale of Plant & Equipment	9
Total income		762
Cost of Goods sold	400
Other expenses	100
Doubtful debts expense	15
Interest expense	23
Depreciation - Buildings	30
Depreciation - Plant & Equipment	40
Total expenses		608
Profit before income tax	154
Income tax expense	50
Profit	104

 

Additional information:

a)     The plant and equipment with a carrying amount of $60,000 (cost $80,000 and accumulated depreciation $20,000) was sold.

b)     New plant and equipment was purchased in cash during the year.

c)     There was no sale of long term investments during the year.

d)     There are no cash sales during the year.

e)     The company pays tax once only before the end of financial year.

f)      The income tax rate is 30%.

Required:

a)     From the data presented above, prepare the statement of cash flows for the year ended 30 June 2021, using the direct method.

b)     prepare note reconciling the net cash from operating activities to profit. 

Note: You are required to show ALL workings and round up to the nearest dollar.

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