3 (35 Marks) Here are the financial statements of Premier Suites Ltd on 31 December 2020 Premier Suites Ltd Abridged Statement of profit or loss& other Comprehensive Income for the year ended 31 December 2020 Revenue Cost of Sales Operating profit before taxation Income tax expense Profit for the Year Notes 2020 239 000 (194 000) 45 000 (9500) 35 500 Premier Suites Ltd Statement of Financial position as at 31 December 2020 ASSETS Notes 2020 2021 Non-current assets Current assets 6 316 200 93 000 281 000 34 000 Inventories Account receivables Cash and cash equivalents 7 61 300 28 000 8 25 800 6 000 5900 TOTAL ASSETS 409 200 315 000 EQUITY AND LIABILITIES Capital and reserves 381 000 192 500 Ordinary share capital (400 000 ordinary shares) 2 214 000 105 000 Non-distributable reserve: Profit on sale of land 6000 0 Distributable reserve: General reserve Retained earnings Preference share capital (100 000 6% convertible preference shares) Non-current liabilities. 8% mortgage debentures Current liabilities Accounts payable 50 000 30 000 11.000 17 500 100 000 40 000 0 100 000 3 0 100 000 28 200 24 200 Bank overdraft Shareholders for dividends TOTAL EQUITY AND LIABILITIES 0 4 000 409 200 22 500 17.400 2 100 3000 315 000 19 Premier Suites Ltd Notes to the financial statements for the year ended 31 December 2020 6. Cost Property, Plant and Equipment Accumulated depreciation Carrying value 2020 2019 2020 2019 2020 2019 Land and buildings 268 100 242 100 268 100 242 100 Plant and machinery 58 700 34 000 21600 11600 Vehicles 18000 18 000 9.000 4 500 Furniture and fittings 5 000 5000 3000 2000 37 100 9000 2000 22 400 13500 3000 349 800 299 100 33 600 18 100 316 200 281 000 Premier Suites Ltd Statement of changes in equity for the year ended 31 December 2020 Preferenc Profit on Ordinary General Share e share capital capital expropria tion of land reserve Retained earnings Total 105 000 40 000 30 000 Balance at 1 January 2020 Profit for the year Dividends declared New shares issued 110 000 60000 Profit on sale of land 6:000 Share issue expenses (1 000) 17.500 35 500 (16 000) (6 000) 192 500 35 500 (16 000) 170 000 (1 000) Inter-reserve transfer 20 000 (20 000) Balance 31 December 214 000 100 000 6000 50 000 11000 381 000 2020 Additional information: 1. Favorable market conditions enabled the company to place 200 000 ordinary shares privately with institutional investors at 55c per share and also to issue 60 000 6% preference shares to the public at N$1 per share. The issue of new shares was to redeem the mortgage debentures The company paid share issue expenses of N$1.000 and this amount was written off at 31 December 2020. 2. The company had sold a small plot in December 2020. The cost of the land disposed of was N54 000 (No other fixed assets were sold or scrapped during the year) 3. Included in the profit before taxation is interest paid of NSS 400, and interest received of NS 1300 4. Dividends declared consists of: Ordinary dividends N$10 000 . Preference dividends NS 6000 REQUIRED: 3.1 3.2 TOTAL Prepare a statement of Cash Flow of Premier Suites Ltd for the year ended 31 December 2020 to comply with the requirements of IAS 7. Using the direct method. Prepare the following notes to comply with the requirements of IAS 7 and Companies Act 24 of 2008: 3.2.1 Reconciliation of the profit before tax to cash generated from operating activities. 3.2.2 Accounting policy and notes for cash and cash equivalent MARKS 25 5 5 35