Kestrel has prepared a Trial Balance at 30 June 2022:

DR () CR() Revenue - , 55,000 Purchases 20,000, - Inventory at 1 July 2021 8,000, - Rent expense 10,450, - Gas, electricity and insurance expense 6,000, - Wages and salaries 8,200, - Trade receivables 10,000 , - Trade payables - , 20,000 Cash at bank - , 8,100 Ordinary share capital - , 8,450 Bank loan, repayable 2025 - , 8,000 Land and buildings: cost 710,000 , - Land and buildings: accumulated depreciation at 1 July 2021 - , 10,00 Fixtures and fittings: cost 24,000 , - Fixtures and fittings: accumulated depreciation at 1 July 2021 - , 10,000 Retained earnings -, 612,000 Loan interest paid 400, - Allowance for trade receivables - , 500 TOTAL : 797,050 , 797,050 The following has yet to be accounted for: 1. The interest rate on the loan is 10%.The trial balance reflects the interest paid in the year. 2. Kestrel holds 3 different products in inventory at the 30 June 2022. Product line The Novice The Proficient. The Expert Cost 5,000 4,000 4,000 Selling price 6,000 3,000 6,000 Kestrels depreciation policy is as follows: Buildings straight line over 50 years Fixtures and fittings 20% reducing balance The cost of the land was 60,000. The building is estimated to have a residual value of 200,000. Fixtures and fittings are expected to have no resale value at the end of their useful life. 4. Gas, electricity, and insurance expense reflects the cash paid during the year. This includes a payment of 1,680 made for the annual insurance premium on 30 April 2022. 5. During the year, Kestrel conducted a review of the trade receivables: I. Receivable balances felt to be irrecoverable, 600 II. An allowance of 5% of trade receivables is to be maintained to cover doubtful debts adjust for the 5 issues above to prepare: a) A Statement of profit or loss for the year ended 30 June 2022 (10 marks) b) A Statement of financial position as at 30 June 2022 (15 marks) Note: show clear workings, cross referenced to the relevant entry in your financial statements. All numbers should be calculated to the nearest c) The directors at Kestrel do not understand the accounting for inventory. Provide a clear explanation of the rationale behind both the measurement and accounting for the inventory in adjustment 2.