Reference no: EM132919010

During the year ended 30 June 2021, the cash balance of Orion Trading Ltd increased from $50 000 (on 30 June 2020) to $60 000 (on 30 June 2021). The following data was extracted from Orion Trading Ltd's accounting system for the year ended 30 June 2021:

Payments to suppliers $400 000

Payment of bills payable 45 000

Payment of dividends 55 000

Loan to another company 30 000

Depreciation expense 80 000

Payment of income tax 12 000

Cash receipt of dividends 4 000

Payments to acquire non-current assets 120 000

Cash received from issuing shares 25 000

Cash received from issuing bill payable 35 000

Payments to employees 170 000

Cash receipt of interest 16 000

Payment of interest 18 000

Cash received from sale of non-current assets 85 000

Cash received from customers 680 000

Cash received from repayment of loan 15 000

Required

Problem (a) Prepare the Statement of cash flows for Orion Trading Ltd. Use the Statement of cash flows format.

Problem (b) Explain the differences between a statement of cash flows prepared using the direct method from one prepared using the indirect method.