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

10

-

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.