Question 1 Presentation of Financial Statements (40 marks) The trial balance of Lax Ltd at 30 June 2022 was as shown below. LAX LTD Trial Balance as at 30 June 2022 Debit Credit Share capital (ordinary shares issued at $2, fully paid) $200000 General surplus 25000 Retained earnings 73400 Revaluation surplus 85000 Mortgage loan (secured over land and buildings) 250000 Bank overdraft (at call) 70900 7% debentures 80000 Interest payable 2800 Accounts payable 69500 Dividend payable 10000 Employee benefits payable 34200 GST payable 18400 Allowance for doubtful debts 12800 Accumulated depreciation plant and equipment 42500 Accumulated impairment losses goodwill 10000 Cash at bank $500 Accounts receivable 67800 Inventory 87700 Prepaid insurance 7000 Plant and equipment 222500 Land 220000 Buildings 380000 Goodwill 50000 Government bonds (long-term) 35000 Shares in Carncotton Ltd 20000 Sales revenue 825000 Cost of sales 450000 General expenses 265000 Loss on sale of plant 10000 Interest received 2500 Dividends received 3500 $1815500 $1815500 5 Additional information 1. General expenses for the year include the following items. 2. The company tax rate is 30%, to be applied to profit before tax. 3. The opening balance of the allowance for doubtful debts was $15 250. 4. All assets are carried at cost, except for land and buildings, which are carried at fair value. 5. During the year, 50 000 shares were issued at an issue price of $2 each, payable in full on application. 6. On 30 June 2022, the directors revalued land and buildings based on fair values. The carrying amounts of land and buildings before the revaluation were $195 000 and $350 000 respectively. 7. The mortgage loan is repayable in annual instalments of $50 000 starting on 1 March. 8. The debentures are to be redeemed on 31 March 2022. There is no plan to refinance these debentures in the future. 9. The employee benefits payable consist of the following. 10. No employee is eligible for long-service leave until 2023. 11. Goodwill is not considered to be impaired. 12. During the year, Lax Ltd sold an item of plant for $38 000. The carrying amount of the plant at the date of sale was $48 000. 13. During the year, an interim dividend of $20 000 was paid, and a final dividend of $10 000 was declared. $25 000 was also transferred to the general reserve. Required: a) Prepare a Statement of Profit or Loss and Other Comprehensive Income for Lax Ltd for the year ended 30 June 2022, according to the requirements of IAS 1/AASB 101. b) Prepare the Retained Earnings account for the year ended 30 June 2022.