FACULTY OF COMMERCE, MANAGEMENT AND LAW Question 3 (30 Marks) Inceptus (Pty) Ltd has asked you to help prepare the financial statements for the year ended 30 September 2021. The Trial balance of the company as at 30 September 2021 is set out below: Trial Balance as at 30 September 2021 Ordinary Share Capital Interest Trade Receivables Trade Payables 6% Long term loan Distribution costs Dr Cr NS'000 N$'000 21000 900 20 200 15 490 12 800 8 228 99 540 1930 30 000 134 840 17 820 Administrative expenses Purchases Sales Retained earnings Bank Inventories as at 1 October 2020 20 730 Share Premium Land (cost) 35 900 Buildings (cost) 12 800 Fixtures and fittings (cost) 6950 Motor Vehicles (cost) 17320 Office Equipment (cost) 5970 Buildings-accumulated depreciation Fixtures and fittings-accumulated depreciation Motor Vehicles- accumulated depreciation Office Equipment-accumulated depreciation Allowance for credit losses Returns inwards Returns outwards Dividend 456 5.000 9020 4 370 10030 2320 620 714 7 500 251 224 251 224 Other information: 1) The authorized share capital of the company, all of which has been issued consists of ordinary shares with a par value of N$0.50 each. 2) Inventories at the close of business on 30 September 2021 were valued at cost at N$13 870 000. 3) The corporation tax charge for the year has been calculated as N$5 190 000. 4) The land has been revalued up by professional valuers by N$3 200 000. 12 FACULTY OF COMMERCE, MANAGEMENT AND LAW The revaluation is to be included in the financial statements for the year ended 30 September 2021 5) Goods sold to a customer on credit for N$121 000 in August 2021 which originally cost N$72 000 were returned to the company on 29 September 2021. No entries have been made in the accounts to reflect this return of goods 6) Allowance for credit losses is to be 5% of accounts receivable balance at the year-end. 7) The company ran a 4 month advertising campaign starting on 1 September 2021 for N$76 000. 8) Depreciation has not been accounted for yet and should be provided as follows: Building at 5% on cost Fixtures and Fittings at 10% on cost Office equipment at 10% reducing balance method Motor vehicle at 20% reducing balance method Motor vehicle at 20% reducing balance method The Building, Fixtures & Fittings and Office equipment are used for administrative purposes. The motor vehicle is used to deliver goods to customers 9) Interest for the last 6 months of the year has not been included in the accounts. 10) The long term loan was acquired on 1 October 2018. This loan is secured by land and building and is payable over a period of 10 years. A repayment of NS3 000 000 is repayable every 31 December of each year. 11) The directors resolved that N$5 million be transferred to the General reserve. REQUIRED: 3.1 Prepare the statement of profit or loss and other comprehensive income for Inceptus (Pty) Ltd for the year ended 30 September 2021 to comply with minimum requirements of companies Act 2008 and International Financial Reporting Standards, using expenses by function. Comprehensive information is not required. 3.2 Prepare the statement of changes in equity for Inceptus (Pty) Ltd for the year ended 30 September 2021 to comply with minimum requirements of companies Act 2008 and International Financial Reporting Standards. Comprehensive information is not required. 3.3 Prepare the notes to the financial statement for the year ending 30 September 2021 to comply with minimum requirements of companies Act 2008 and International Financial Reporting Standards with respect to: L Statement of compliance il Statement of significant accounting policies III. Borrowings Total Marks 15 B 30