1 Assume that it is now 31 January 2022. Burator Ltd is a manufacturing company which sells its goods online to both trade and retail customers. It also operates a recycling business. The following balances have been extracted on 31 December 2021 from the cloud-based accounting system used by Burator Ltd. Sales Purchases Notes E 1,534,000 832,100 Administrative expenses 256,400 Operating costs 162,300 Other income 30,000 Inventories at 31 December 2020 31,700 Trade and other receivables 43,200 Trade and other payables 2 49,600 Plant and equipment 4 Cost 75,000 Accumulated depreciation at 31 December 2020 23,400 Land and buildings 3,4 Cost (land 250,000) 820,000 Accumulated depreciation at 31 December 2020 242,250 Retained earnings at 31 December 2020 48,850 Ordinary share capital (1 shares) 250,000 5% 1 convertible bonds 5 50.000 Cash at bank Notes 1 7.400 A government grant of 30,000 was received on 1 October 2021. The 30,000 was debited to cash and credited to other income. The grant was awarded to Burator Ltd for running a training course for school leavers. The training course started on 1 October 2021 and will run for 24 months. Burator Ltd expects to be able to comply with the conditions of the grant 2 Inventories were counted and valued at 31 December 2021 at 21,500. However, it was later discovered that two types of inventory were not included in the count at 31 December 2021, as detailed below. . In December 2021 50 units of Borrans were returned by a customer. These cost 12 per unit and were originally sold at 18 per unit. However, as returns they will be sold at a discount of 35% on the original selling price. The original sales and returns were correctly accounted for in revenue and receivables. Burator Ltd look delivery of 300 units of Erwoods on 1 November 2021 from a foreign supplier, which invoices in BS. At 31 December 2021 225 units were still held in the warehouse. The invoice of B$15,000 for the total delivery remained unpaid and was included in trade payables at the exchange rate on the date of delivery. The spot exchange rates were as follows: 1 November 2021 31 December 2021 B$1:0.56 B$1:0.70 3 On 1 January 2021 Burator Ltd purchased a new recycling centre for 120,000. The centre is estimated to have a useful life of 10 years from the date of acquisition. The purchase conditions require Burator Ltd to decommission the centre and restore the land at the end of the 10 years. The decommissioning and restoration costs at the end of period were estimated at the purchase date to be 40,000. The only accounting entries made were to debit land and buildings and credit cash with the 120,000 purchase cost. 4 No adjustments have been made for depreciation for the year ended 31 December 2021. The straight-line method of depreciation is used. Unless stated otherwise, buildings have a 40 year useful life and plant and equipment a 12 year useful life. All expenses associated with property, plant and equipment are recognised in cost of sales. 5 On 1 January 2021 Burator Ltd issued 50,000 5% 1 convertible bonds at par, debiting cash and crediting convertible bonds. On 31 December 2023 each bond can be redeemed for cash at par or converted into ordinary shares. Interest is payable on the bonds annually in arrears. On 31 December 2021 the interest due on the bonds had not been paid and no accounting entries made. The equivalent effective interest rate on similar bonds without the conversion rights is 8% pa. 6 The income tax liability for the year ended 31 December 2021 has been estimated at 54,000. An appropriate discount rate is 6% pa. Requirement Prepare a statement of profit or loss for Burator Ltd for the year ended 31 December 2021 and a statement of financial position as at that date in a form suitable for publication. Total: 27 marks