Morontuo Plc (Morontuo) deals in electrical and other household appliances. It has a fleet of vehicles used in the distribution of these goods. Morontuo prepares and issues its financial statements on or before 30 April of the subsequent year. The company is preparing its financial statements for the year ended 31 December 2021. The trial balance extracted for this purpose for the period is as follows:

Note GH000 GH000

Revenue

i)

1,756,500

Cost of sales

1,240,900

Administrative expenses

270,000

Selling & Distribution expenses

182,500

Non-current assets (cost)-31/12/2021:

ii)

Building (Land: GH16 million)

132,000

Motor Vehicles

27,800

Office Equipment

13,600

Accumulated depreciation -1/1/2021:

ii)

Building

26,400

Motor Vehicles

11,120

Office Equipment

1,200

Inventory (31/12/2021)

iv) 115,800

Trade & other receivables

118,500

Trade payables

87,500

Vehicles rental income

ii)

28,600

Cash & Bank balances

548,700

AlphaBank loan

iii)

36,000

Share capital

600,000

Retained earnings

112,500

Suspense

iii) 10,020

2,659,820 2,659,820

Additional information: It has been the policy of the company to repair goods sold and returned by customers for any minor or major defects. This policy has been in place for the last five years. The companys past and future expectations indicate that 25% of goods sold would have minor defects and 15% of the goods sold would have major defects. The estimated repairs cost for minor and major defects for the next 12 months are GH8 million and GH2 million respectively. The effect of this policy is yet to be incorporated in the above trial balance.

Morontuo, over the years, rents some of its spare vehicles used in the distribution of its products to competitors. The company is also noted to routinely sell these vehicles used for rental purposes after some period of time of the rental services. Included in the above trial balance is, the cost of two vehicles, X and Y for GH3.5 million and GH2 million respectively used for rental services. The vehicles were both acquired on 1 January 2021. On 1 October 2021, management decided to sell the vehicles, X and Y, and accordingly started looking for prospective buyers. Vehicle Y was sold on 1 December 2021 at the price of GH1.88 million. The consideration for the disposal is yet to be paid by the buyer. The effect of the decision to sell the vehicles is yet to be incorporated in the above balances. No depreciation has been computed on the non-current assets for the year ended 31 December 2021. Non-current assets are depreciated as follows: Building 2% of cost Motor vehicle and office equipment 20% of cost Depreciation is charged to cost of sales.

It is the policy of the company to depreciate assets in the year of acquisition and the year of disposal.

Suspense represents the interest and principal payment made so far on a Bank Loan contracted by the company. The company, on 1 July 2021, secured the loan of GH36 million from AlphaBank as indicated in the trial balance. The loan is repayable in monthly equals instalment of GH1 million over 3 years, in addition to the interest payment for the month, computed on the outstanding value of the loan at the beginning of the month. The annual fixed interest rate on the loan is 24%.

Included in the inventory balance at 31 December 2021 are finished goods costing GH15 million, which have been slow-moving in terms of sales. These finished goods were sold at 98% of their carrying amounts in the first week of January 2022.

Current tax for the year ended 31 December 2021 is estimated at GH15.8 million. Ignore the effect of any deferred tax.

Required: Prepare the Statement of Profit or Loss and other comprehensive income of Morontuo for the year ended 31 December 2021 and the Statement of Financial Position as at that date in accordance with IFRS. Show clearly all relevant workings.