Tutorial Question 2: Adapted Final exam question An Income Statement and a comparative Balance Sheet for XYZ Ltd are as follows: XYZ Ltd Comparative Balance Sheet As at 30 June 2022 and 2021 Cash Accounts receivable Allowance for doubtful debts Inventory Long-term investments Land Buildings Accumulated depreciation—buildings Equipment Accumulated depreciation—equipment Total assets Accounts payable Accrued expenses Income tax payable Short-term loan Long-term loan Bonds payable Share capital Revaluation surplus General reserve Retained profits Total liabilities & shareholders’ equity Page 7 2022 $’000 229 145 (16) 175 214 172 186 (75) 437 (214) $ 1,253 2021 $’000 66 128 (12) 190 169 149 225 (81) 437 (149) $ 1,122 $ $ 87 27 15 9 75 109 491 32 78 330 $ 1,253 51 11 23 20 0 259 420 17 29 292 $ 1,122 XYZ Ltd. Income Statement For Year Ended 30 June 2022 Sales Cost of goods sold Gross profit Expenses: Bad debt expense Insurance expense Depreciation expenses Other expenses Interest expense Loss on disposal of land $ 1,520,000 (1,110,000) $ 410,000 $ (15,000) (9,000) (102,000) (96,000) (25,000) (18,000) (265,000) $ 145,000 Other income: Gain on sale of buildings Dividends received Profit before income tax Income tax expense Net profit $ 31,000 5,000 $ 36,000 181,000 (67,000) $ 114,000 $ The following additional information during the year was obtained from an examination of the ledger: • • • • Buildings with original cost of $89,000 and accumulated depreciation of $43,000 were sold. A parcel of land with an original cost of $60,000 was disposed of. Another parcel of land was revalued upward. A bonus share issue of $15,000 was declared out of Revaluation Surplus. Required: Prepare the Cash flow statement using direct method for the financial year ended 30 June 2022. Page 8