(b) The following are summaries of the draft financial statements of Katutura Traders for financial year ended 31 July 2018 together with the comparative figures for 2017. During August 2018, prior to the signing off of the financial statements, the auditors Messrs. Angula & Partners discovered that a fraud had been taking place in the company for the previous three years. The credit controller had been misappropriating monies paid to the company by its customers, the amounts instead appearing as receivables in the books. The effect of the fraud was that amounts shown in the financial statements as receivables need to be written off as they were in fact paid. There is no prospect of recovering the money as the employee lost it gambling and is now bankrupt. The Employee has since been dismissed by katutura Traders. Page 15 of 17 The amounts misappropriated-paid but still reflected in receivables during the periods are as shown on the table below: Date - period ending I 31 July 2016 N$14,000 31 July 2017 N$16,000 31 July 2018 N$20,000. Statements of Profit or loss and Other Comprehensive Income for year ended 31 July 2018 2017 N$'000 N$'000 Revenue 300 275 Cost of Sales (225) (212) Gross Profit 75 63 Expenses (30) (26) 45 37 Statements of Changes in Equity (Retained Earnings only) for year ended 31 July 2018 2017 N$'000 NS'000 Balance 1 August 258 236 Profit for the year 45 37 Dividends declared - Balance (16) (15) 31 July 287 258 Statements of Financial Position as at 31 July 2018 N$'000 Non-current Assets 294 Net Current Assets 143 437 Equity Share Capital 150 Retained Earnings 287 437 2017 N$'000 306 102 408 150 258 408 REQUIRED Restate the above financial statements, including comparatives, incorporating the adjustments you deem necessary as a result of the fraud. Ignore the effect of taxation. Disclosure notes are not required. (15 marks) Marks allocated as follows