418 Question 1 The following trial balance is extracted from the books of Alpha Ltd as at 30 June 2020. Dr Cr $000 $000 Inventory 1 July 2019 45 Sales 1,500 Rental income 28 Land at cost 330 Buildings - at cost 950 - accumulated depreciation Vehicles - at cost 150 - accumulated depreciation 54 Equipment 80 Accounts receivable and payable 125 99 General distribution costs 145 General administrative expenses 220 Director's fees 78 Dividend paid 77 Ordinary shares 220 Allowance for doubtful debts Bank 18 Purchases 450 Retained earnings at 1 July 2019 196 10% Long term loan 110 Long term loan interest 5 2,655 2,655 12 The following additional information is available: (1) The company's depreciation policy is as follows: Buildings 4% p.a. straight-line Vehicles 20% p.a. reducing balance Equipment 20% p.a. straight-line In all cases, a full year's depreciation is charged in the year of acquisition and none in the year of disposal. The equipment was purchased on 1 January 2020 and is used in the factory. On 30 June 2020 one of the vehicles that cost $25,000 in 2018 was sold for $11,000. This transaction was not recorded in the ledger and the sale proceeds will not be received until August 2020. Depreciation of vehicles is to be charged to distribution costs and depreciation of buildings is to be share equally between cost of sales and administrative expenses. (2) The company's inventory at 30 June 2020 was valued at $56,000 and includes an item valued at $5,000, its usual cost price. However, this item was received free as part of a promotion campaign. (3) Accounts receivable include a debt of $5,000 that is to be written off. The allowance for doubtful accounts is to be adjusted to 5% of the accounts receivable at year end. (4) In January 2020 an interim dividend of $77,000 was paid. A final dividend of $55,000 was declared and authorized in June 2020. (5) The corporation tax liability for the year ended 30 June 2020 is estimated to be $94,000. (6) Long-term loan interest outstanding is to be accrued. (7) General administrative expenses include bank overdraft interest of $4,000. (8) The land of the company was professionally valued at $500,000 at 30 June 2020. This valuation should be incorporated into the financial statements. Ignore any tax effect. 2 Required: Prepare the following financial statements for Alpha Ltd in accordance with the requirements of HKAS1: (a) a statement of profit or loss and other comprehensive income for the year ended 30 June 2020; (26 marks) (b) a statement of financial position as at 30 June 2020; and (12 marks) (c) a statement of changes in equity for the year ended 30 June 2020