Mwata plc was established in 2006 and manufactures windows and doors

The following draft trial balance has been produced for the year ended 31 march 2022

K000

K000

Revenue		26,620
Dividends Received		52
Cost Of Sales	12,710
Distribution Cost	3,290
Administrative Cost	2,300
Finance Costs	327
Interim Dividend Costs	90
Freehold Land	2,790
Freehold Building	6,200
Leasehold Building	1,200
Plant And Machinery	5,429
Furniture And Fittings	3,840
Provision For Dep:
Freehold Buildings		1,300
Plant And Machinery		1,250
Furniture And Fittings		1,100
Non Current Asset Investment( At Cost)	940
Closing Inventory	2,016
Trade Receivable/Payables	1,838	834
Bank Account		100
Under Provision For Corporate Tax Previous Year	6
Share Capital( 50 Ngwee Ordinary Share		4,000
Share Premium		320
Loan Stock ( Redeemable 2030)		2750
Deferred Tax Account		650
Retained Earnings		4,000
	42,976	42976

Additional Information

1. The companys depreciation policy is to charge a full year in the accounting year of acquisition of the asset, but none in the year of disposal.
2. On 1 April 2021 the freehold buildings were valued at a figure of K7,000,000. The directors wish to incorporate this figure into the accounts. The buildings have an estimated remaining life of 40 years. Depreciation of buildings is charged to cost of sales.
3. Plant and machinery bought on 30 September 2019 and costing K100,000 was sold on 31 August 2020 for K48,000. No adjustment for this sale has been made and the sale proceeds have been included in revenue in the trial balance.
4. The leasehold building was acquired on 6 July 2021. The lease is for a period of 30 years.
5. During the year, a research and development department was established, incurring costs to the year-end of K800, 000, including K200,000 for specialised machinery (bought on 11 January 2022) . The whole of this expenditure is included in cost of sales. The directors of the company estimate that K500,000 of the expenditure relates to the development of a new window frame that will be launched later in 2022 and the remaining amount was pure research
6. On 1 September 2021 Mwata plc closed a division of the company. The divisions results from 1 April 2021 to the date of closure, which are included in the figures in the trial balance were:

K000

Revenue 1,850

Cost of sales 2,220

The directors of the company decided at a board meeting to dispose of the plant and machinery used by the discontinued division and started actions to locate a buyer. The plant had a carrying value at 1 April 2021 of K420,000, made up of a cost of

K820,000 and accumulated depreciation of K400,000. The plant is in short supply, so the company is confident that the asset will be sold quickly. The current market value of the plant is K350,000 and it will cost K8,000 to dismantle the machinery to make it available to the purchaser.

1. Additional slow moving Inventory of Mwata with a cost value of K1,500,000 and market value of K1,000,000 has not been included in the accounts. Also the year-end stock take found that K200,000 of the inventory was missing, which had been included in the trial balance value. It is suspected that pilfering had taken place.
2. The inventory at 31 March 2022 includes K200, 000 of slow- moving goods. Mwata plc is trying to sell these to another company, but has not been successful in obtaining a reasonable offer. The best price it has been offered is K160,000.
3. Corporation tax is to be provided at a rate of 20% of the net profit on continuing activities as shown in the statement of profit or loss. The company also accounts for deferred taxation in accordance with IAS12. At 31 March 2022, the difference between the carrying amounts of the net assets of Mwata plc and their (lower) tax base was K3, 175,000.

Required

1. Prepare for Mwata plc, a Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 March 2022 ( 25 MARKS)
2. A Statement of Financial Position as at 31 March 2022. ( 20 MARKS)
3. A Statement of Changes in Equity ( 15 MARKS )
4. Prepare a report for the CEO of Mwata plc that explains, with reference to appropriate accounting standards, your treatment of the accounting adjustments for the year ended 31 March 2022. ( 40 MARKS)