Reference no: EM132523478

Below is the group cash flow Statement for Pamodzi Hotels group of companies as at December 2019

Operating activities $,000

PBT 400,320

add back Depreciation 45,600

Less gain on disposal -56,000

add decrease in inventory 26,560

Add decrease in receivables 26,720

less decrease in payables -51,840

Add increase in accrued utilities 25,600

Less Tax paid - 96,000

Total cash flow Operating activities 320,960

Investing activities

Purchase of Plant assets -352,000

Purchase of investment -72,000

Disposal of investment 96,000

Total cash Investing activities -328,000

Financing activities

Issue of new shares 0

Dividends paid -64,000

Bonds purchased 56,000

Total cash flow Financing activities -8,000

Net cash flow for the year -15,040

Additional information

a) Pamodzi group sold its 100% shareholding of a subsidiary SAM hotel for $ 60, 000,000 on 31 December, 2019. At the date of disposal the SAM hotel statement of financial position was

$, 000

Non-Current assets 37,500

Inventory 11,250

Receivables 7,500

Cash 3,750

Payables (5,625)

Tax (1,125)

Net Assets 53,250

It has been brought to you attention that the accountants omitted the above disposal of SAM hotel when preparing the above Group Cash flow Statement.

Required

Question a) Prepare the new cash flow statement for the Pamodzi group that incorporates the disposal of SAM hotel (show all the workings)

Question b) Explain the effect that the above omission had on the Operating, investing and financing activities (note that the explanation should be supported by relevant figures)