Question 1 (75 marks) Shatin Limited is a company incorporated in Hong Kong. It principally engages in the manufacture and sales of audio-video products. In addition to sales through wholesalers, Shatin Limited also operates directly in the retail market through dedicated showrooms. The draft financial information for the year ended 31 December 2020 was shown as follows: Shatin Limited Statement of financial position As at 31 December 2020 2020 $'000 2019 $'000 Non-current assets Property, plant and equipment Accumulated ciatic 6,270 (1,800) 4,470 4,710 60) 3,150 Current assets Inventory Trade receivable Bank 5,760 5,820 2.190 13,770 18,240 5,160 4,500 150 9,810 12,960 Total assets Equity and liabilities Equity Ordinary share capital Retained profit 10,700 2,920 13,620 7,250 1,480 8,730 Non-current liabilities 10% loan notes 870 600 Current liabilities Trade payable Interest payable 2,100 2,460 630 570 Tax payable 660 3,750 18,240 960 3,630 12,960 Total equity and liabilities Shatin Limited Statement of profit or loss and other comprehensive income For the year ended 31 December 2020 Revenue Cost of goods sold Gross profit Gain on disposal of plant Selling and distribution expenses Administrative expenses Profit before interest and tax Interest expense Profit before tax $'000 20,700 (13,500) 7,200 30 (1,680) (750) 4,800 (150) 4,650 (1,260) 3,390 Tax expense Profit for the year Other information (0) Plant with a cost of $360,000 and accumulated depreciation of $54,000 was sold during the year at a profit of $30,000. The depreciation expense for property, plant and equipment for the year of $294,000 was charged to the statement of profit or loss. The increase in ordinary shares was due to an issue for cash on 30 October 2020. Required: (i) Prepare the statement of cash flows for Shatin Limited for the year ended on 31 December 2020 using the indirect method in accordance with HKAS 7 Statement of Cash Flows. Show your workings. (63 marks) (ii) Compute the following ratios for 2020. (Correct your answers to 2 decimal place) Current ratio Acid test ratio Accounts receivable turnover Days' sales in inventory Times interest earned Profit margin Show your workings. (12 marks) Question 2 (25 marks) Jacky Limited, a manufacturer of DVDs, provided the following information for the year ended 31 December 2020: Balances: Direct materials Work-in-process Finished goods inventory Beginning $130,000 $220,000 $90,000 Ending $50,000 $130,000 $108,000 Other information: Depreciation on plant and equipment Direct materials purchases Insurance on plant Repair and maintenance - plant Indirect labor Direct labor $36,000 $320,000 $54,000 $24,000 $ 74,000 $254,000 Required: Prepare a schedule of cost of goods manufactured for Jacky Limited for the year ended 31 December 2020 using the above information.