Mariana prepares her financial statements to 31st December every year. At 31st December, 2019, trial balance was as follows:

DR GHS'000

Capital

Sales

Purchases 50,356 Inventory 1/1/2019 7,900 Returns 545 Printing and Stationery 1,692 Rent 2,400 Discounts 1,800 Transport and travelling 1,760 Repairs and maintenance 1,523 Allowance for receivables

Land at cost 13,500 Building at cost 45,000

Accumulated depreciation on building

Motor Vehicle at cost 24,500

Accumulated depreciation on motor vehicles

Equipment and Furniture 12,450

Accumulated depreciation on equipment & furniture

Trade receivables 9,450 Cash at hand 9,524 Cash at bank

Drawings 4,520 Interest on loan 2,200 Trade payables

20% Loan

CR GHS000 55,720 65,880

1,720

3,520

650

6,100 9,600 4,980

5,950

13,000

22,000

189,120

189,120

The following additional information is relevant: i) Depreciation is to be provided as follows:

Building - 5% per year on cost

Motor Vehicle - 15% per year on reducing balance basis. Equipment & Furniture - 10% per year on reducing balance basis.

ii) Inventory value at 31 December 2019 amounted to GHS 5,840,000

iii) Rent recorded in the trial balance represents 16 months rent paid to 30 , April 2020

iv) A provision of 6% of trade receivable is to be made

v) Rate paid during the year of GH750,000 was omitted from the books.

vi) Adverting cost of GH1,250,000 received in November 2019 remained outstanding at the end

of the year.

vii) The loan was contracted on 30th June 2019 to expand the operations of the business entity.

1

th

You are required to prepare:

a) Income Statement for the year ended 31st December 2019 (12 marks) b) Statement of financial position as at 31st December 2019