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IGNORE VAT Assume a company tax rate is $28\%$ and dividends tax amounts to $15\%.$ The following information has been provided to you: Indigo LtdStatement of financial position at $31$ July $2016$ Note$20162015$ASSETS Non$-$current assets Property, plant and equipment$1289,750197,000$Investments $12,00011,000$Current assets $--$ Inventories $2,50015,500$Accounts receivables $17,50015,000$Prepaid rent $1,500-$Cash and cash equivalents $21,00010,000$Total assets $344,250248,500$ EQUITY AND LIABILITIES Share capital and reserves Share capital $?177,500$Accumulated profits $67,0004,000$Non$-$current liabilities $--$ Long$-$term loan $50,00035,000$Current liabilities $--$ Accounts payables $16,50019,000$Shareholders for dividends $18,7507,500$SARS $4,5005,500$Total equity and liabilities $344,250248,500$Indigo LtdStatement of Profit or Loss for the year ended $31$ July $2016$Revenue $245,000$Cost of sales $?$Gross profit $?$Operating expenses $(49,500)$ Depreciation $9,500$ Rent expense $12,000$ Administrative expenses $10,000$ Wages $18,000$Operating profit $54,250$Investment income: Dividends earned $6,500$Finance costs: Interest expense $(7,000)$Profit before tax $53,750$Income tax expense $(23,000)$Net profit for year $30,750$ Note $1$: Land and buildingsMachinery & equipmentTotal RRRCarrying amount at beginning of year $130,00067,000197,000$ Cost $130,00088,500218,500$ Accumulated depreciation $(21,500)(21,500)$ Additions $65,00038,750103,750$Disposals at carrying amount $-(2,000)(2,000)$Depreciation for the year $-??$ Carrying amount at end of year $195,00094,250289,250$ Cost $195,000118,750313,750$ Accumulated depreciation $-(24,500)(24,500)$Additional information: a$)$ All sales were made on credit. b$)$ Cash purchases of inventory amounted to R$30,150$ and represents $20\%$ of inventory purchases. c$)$ Accounts payable include: $20162015$Trade creditors$13,50016,500$Accrued interest$3,0002,500$ d$)$ During the year obsolete machinery and equipment, which cost R$8,500$ were sold for cash and a R$3,000$ profit was made. It was replaced immediately with new machinery with a cost of R$20,000.$ A cash deposit of R$5,000$ was paid for the new machinery and the remainder to be repaid on $1$ September $2016.$ e$)$ Equipment was purchased for cash. f$)$ Additions of land and buildings were financed through long term loans. A deposit of R$7,000$ was paid. g$)$ The company issued $1,000$ Class A shares to the public at R$12\mathrm{.}50$ each. Share issue costs amounted to R$2,500.$ h$)$ It was decided to distribute a Class A dividend, equal to $10\%$ of the Share capital balance at $31$ July $2016.$ At year end, the dividend has not yet been paid, but had been declared. i$)$ Included in the $2015$ Long term loan balance is R$15,000$ which related to Class C liability. The share were redeemed and returned to the company during the current financial period. There was no premium on redemption of these shares. You are required to: $1.$ Prepare the Statement of Cash Flows for Indigo Ltd for the year ended $31$ July $2016,$ using the direct method. Notes to the Statement of Cash Flows are not required.

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