Question 2 Ling Yun has prepared its final accounts as below: Balance Sheet as at 31 March: Current assets Cash at bank Accounts receivables Inventory 2009 $'000 $'000 106 300 251 657 2008 $'000 $'000 16 210 154 380 220 170 Non-current assets Motor vehicle Less: Accumulated depreciation Office equipment Less: Accumulated depreciation TOTAL ASSETS Current liabilities Salary payable Accounts payable 300 (80) 250 (105) 190 (20) 200 (100) 145 1022 100 650 12 178 190 6 140 146 130 Non-current liabilities Bank loan TOTAL LIABILITIES NET ASSETS 190 276 374 832 Owner's Equity Beginning capital Add: Net profit 374 480 854 22 832 346 50 396 22 374 Less: Drawings Ending capital Ling Yun: Income Statement for the year ended 31 March 2009 $'000 Sales Less: Cost of goods sold $'000 3000 (1800) 1200 8 1208 Add: Interest income Less: Expenses Interest expense Depreciation expense of motor vehicle Depreciation expense of office equipment Salary expense Sundry operating expenses 10 60 50 600 728 480 Net profit Notes to the accounts: Ling Yun collected the interest revenue as it arose. It paid the interest expense and sundry operating expenses immediately when incurred during the year. On 5 April 2008 Ling Yun bought a fleet of motor vehicles for $110,000 cash. During the financial year Ling Yun sold office equipment for $5,000 cash. The original cost was $50,000 and its accumulated depreciation prior to the disposal was $45,000. On 2 April 2008, Ling Yun bought brand new office equipment for $100,000 cash. (iv) (v) In the middle of the financial year, Ling Yun redeemed the bank loan. REQUIRED: (a) Prepare a detailed Cash Flow Statement of Ling Yun for the year ended 31 March 2009. (16 marks) (b) The owner of Ling Yun could not understand why the net profit for the year was so much, $480,000 but the cash at bank did not increase by the same amount. He said, "based on the above facts, some body must have stolen a lot of money from the business. Do you agree with the owner? Discuss. (4 marks)