Question: Question 3 Watson is a sole trader. He provides the following financial information in respect of his business. Income statement for the year ended 31

Question 3 Watson is a sole trader. He provides the following financial information in respect of his business.

Income statement for the year ended 31 December 2012

$000

Sales

3380

Cost of sales

(2000)

Expenses

(1200)

Profit for the year

180

Statements of financial position at:

31 December 2011 31 December 2012

$000 $000 $000 $000

Non-current assets

Freehold land

2000

3500

Plant and machinery at cost 900

1020

Less: depreciation (500)

(470)

Net book value

400

550

2400

4050

Current assets

Inventory

310

320

Trade receivables

240

210

Cash and cash equivalents

560

530

Current liabilities

Trade payables

200

160

Bank overdraft

530

200

690

Non-current liability loan

500

350

Net assets

2260

3540

Additional information

Drawing is $400 During the year Winston purchased new plant at a cost of $200 000. He also sold some plant that had a net book value of $20 000 and had been depreciated by $60 000. This resulted in a loss on disposal of $2000.

REQUIRED

(a) Prepare a statement of cash flows for the year ended 31 December 2012.

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