Additional information:

(i) The accounting policies of the business remained the same for the two years.

(ii) The interest expense and miscellaneous expenses were paid as they arose.

(iii) The interest income was collected as it arose.

(iv) During the financial year STC did not dispose any of its non-current assets. The business also did not undertake revaluation of its assets. Any increase in these assets were bought and paid through the bank account.

(v) STC redeemed part of the loan payable.

(vi) Inventory and accounts receivable balance as at 30 June 2018 were RM280,000 and RM245,000 respectively.

REQUIRED:

(a) Prepare a detailed Cash Flow Statement of STC for the year ended 30 June 2020.

(b) The owner of STC is confused. He could not understand why the increase in cash at bank balance is not the same as increase in profit for the year. Explain to the owner with reasons (you may extract from the financial statements of STC).

c) Calculate

i) Gross profit margin

(ii) Net profit margin

(iii) The average collection period of Accounts Receivables in days

(iv) Explain with possible reasons for the difference in the results that you have calculated in (i), (ii) and (iii)

Saffron Therapy Centre (STC) is an altemative treatment center for viral infection disease has been in business for many years. STC has prepared its comparative financial statements as shown below Balance Sheet as at 30 June: Current assets RM000 RM RM RMO Cash at hank 105 Accounts receivable 255 Inventory 290 360 Prepaid insurance 676 SIS Non-Sur Land and building 1.300 1.470 Less: Accumulated depreciation LIS 12 Delivery vehicle Less: Accumulated depreciation 100 Office equipment Less: Accumulated depreciation (60) 154 TOTAL ASSETS 2.046 Current liabilities Salary payable Accounts payable 301 Non-rent. liabilities Loan payable TOTAL LIABILITIES 180 NET ASSETS 99894 6438319 14 1. Beginning capital Add: Net Profil Les Drawing Add: Additional Capital Ending capital 1.400 300 (101) NON STC: Income Statement for the year ended 10 June 2019 RM RM200 Sales 100 Less: Cost of goods sold Grosse profiel Add: Interest income 1.110 RM St 300 LIII 20 Interest expense Miscellaneous expenses Depreciation expenses Salary expose Insurance expense Netpro 516 al