Notes Dr $000 Cr $000 33,600 6 8 24,050 1,350 4,530 1,880 950 640 56 4 1,250 130 300 Revenue Cost of sales Inventory, as at 31 December 2020 Administrative expenses Distribution costs Dividends paid Other operating income Over-provision for corporation tax for 2019 Investments Investment income Interest expense Properties at valuation: Land Buildings Plant and machinery Accumulated depreciation: Buildings Plant and machinery Proceeds from sale of non-current assets Accounts receivable and payable Allowance for doubtful debts, as at 1 January 2020 Cash at bank and in hand Bank loans 10% Debentures (due in 2024) Issued share capital (5 million ordinary shares) Revaluation surplus Retained earnings 800 8,000 4,200 2 lo 3 2,3 2,3 640 2,140 80 1,840 85 4,500 5 98 9 1,800 1,250 6,000 600 3,047 51,908 51,908 The following additional information is available: (1) Faust Ltd's issued share capital as at 1 January 2020 consisted of 4,000,000 ordinary shares. During June 2020 the company made a 1 for 8 bonus issue by capitalising profits at a value of $1 per bonus share. In October 2020 the company made a rights issue of 1 for 9 ordinary shares at $1.50 a share which was fully subscribed and fully paid. These transactions have been correctly recorded in the ledger. (2) During the year ended 31 December 2020 plant and machinery costing $200,000 was sold. The plant had been depreciated by $140,000 and was sold for $80,000. The proceeds of $80,000 have been recorded in the accounts but no other entries have yet been made in respect of this disposal. (3) Depreciation for the year ended 31 December 2020 has yet to be provided for. The company's depreciation policies are: Land Buildings Plant and machinery 0% 2% straight line method 20% reducing balance method Depreciation is to be provided for on a full year basis. The buildings are employed for administration purposes. (4) Non-current investments are classified as fair value through other comprehensive income. The fair value of the company's investments at 31 December 2020 is $1,100,000. (5) The allowance for doubtful debts is to be increased to $180,000. Bad debt is classified as distribution expense by Faust Ltd. (6) Certain items valued in the figure for inventory as at 31 December 2020 at $15,000 should have been written down to their net realisable value of $4,000. (7) Corporation tax on the profit for the year ended 31 December 2020 has been estimated at $960,000. (8) Shortly after 31 December 2020 Faust Ltd discovered errors in its accounts which meant that administrative expenses of $627,000 have been incorrectly included in the figures for the year ended 31 December 2020. Faust Ltd has calculated that $450,000 of these expenses relate to the year ended 31 December 2019 and $177,000 to the year ended 31 December 2018 (9) The amount of bank loan due for repayment in March 2019 is $300,000, while the remaining amount will be due in 2023. (10) In March 2021 the directors of Faust Ltd propose to pay a final dividend of $0.1 per share for all shares outstanding on 31 December 2020. Instructions: Prepare for Faust Ltd (a) a statement of profit or loss and other comprehensive income for the year ended 31 December 2020 ; (b) a balance sheet as at 31 December 2020, and (c) a statement of changes in equity for the year ended 31 December 2020 in compliance with the relevant accounting standards and ordinance in Hong Kong. . Show full supportive workings. Round all figures to the nearest $000. Presentation will count towards the grade of the assignment. Earnings per share, comparative figures and other disclosure notes are not required. Notes Dr $000 Cr $000 33,600 6 8 24,050 1,350 4,530 1,880 950 640 56 4 1,250 130 300 Revenue Cost of sales Inventory, as at 31 December 2020 Administrative expenses Distribution costs Dividends paid Other operating income Over-provision for corporation tax for 2019 Investments Investment income Interest expense Properties at valuation: Land Buildings Plant and machinery Accumulated depreciation: Buildings Plant and machinery Proceeds from sale of non-current assets Accounts receivable and payable Allowance for doubtful debts, as at 1 January 2020 Cash at bank and in hand Bank loans 10% Debentures (due in 2024) Issued share capital (5 million ordinary shares) Revaluation surplus Retained earnings 800 8,000 4,200 2 lo 3 2,3 2,3 640 2,140 80 1,840 85 4,500 5 98 9 1,800 1,250 6,000 600 3,047 51,908 51,908 The following additional information is available: (1) Faust Ltd's issued share capital as at 1 January 2020 consisted of 4,000,000 ordinary shares. During June 2020 the company made a 1 for 8 bonus issue by capitalising profits at a value of $1 per bonus share. In October 2020 the company made a rights issue of 1 for 9 ordinary shares at $1.50 a share which was fully subscribed and fully paid. These transactions have been correctly recorded in the ledger. (2) During the year ended 31 December 2020 plant and machinery costing $200,000 was sold. The plant had been depreciated by $140,000 and was sold for $80,000. The proceeds of $80,000 have been recorded in the accounts but no other entries have yet been made in respect of this disposal. (3) Depreciation for the year ended 31 December 2020 has yet to be provided for. The company's depreciation policies are: Land Buildings Plant and machinery 0% 2% straight line method 20% reducing balance method Depreciation is to be provided for on a full year basis. The buildings are employed for administration purposes. (4) Non-current investments are classified as fair value through other comprehensive income. The fair value of the company's investments at 31 December 2020 is $1,100,000. (5) The allowance for doubtful debts is to be increased to $180,000. Bad debt is classified as distribution expense by Faust Ltd. (6) Certain items valued in the figure for inventory as at 31 December 2020 at $15,000 should have been written down to their net realisable value of $4,000. (7) Corporation tax on the profit for the year ended 31 December 2020 has been estimated at $960,000. (8) Shortly after 31 December 2020 Faust Ltd discovered errors in its accounts which meant that administrative expenses of $627,000 have been incorrectly included in the figures for the year ended 31 December 2020. Faust Ltd has calculated that $450,000 of these expenses relate to the year ended 31 December 2019 and $177,000 to the year ended 31 December 2018 (9) The amount of bank loan due for repayment in March 2019 is $300,000, while the remaining amount will be due in 2023. (10) In March 2021 the directors of Faust Ltd propose to pay a final dividend of $0.1 per share for all shares outstanding on 31 December 2020. Instructions: Prepare for Faust Ltd (a) a statement of profit or loss and other comprehensive income for the year ended 31 December 2020 ; (b) a balance sheet as at 31 December 2020, and (c) a statement of changes in equity for the year ended 31 December 2020 in compliance with the relevant accounting standards and ordinance in Hong Kong. . Show full supportive workings. Round all figures to the nearest $000. Presentation will count towards the grade of the assignment. Earnings per share, comparative figures and other disclosure notes are not required