Question 1 The following information is taken from the financial statements for Lavender Ltd for the year ended 30 June 20X5. Extract from the Income Statement is as follows $ Sales revenue 45,000,000 Cost of sales 30,000,000 Gain on sale of plant and equipment 200,000 Administrative expenses 4,000,000 Distribution costs 6,100,000 Other expenses 300,000 Interest expense Income tax expense The Statement of Financial Position is as follows: 250,000 1,150,000 20X5 $ 20X4 $ Bank 2,000,000 2,500,000 Accounts receivable 4,686,000 5,344,000 Allowance for doubtful debts (93,000) (107,000) Inventory 6,836,000 7,094,000 Prepaid assets 330,000 362,000 Plant and equipment 23,018,000 22,728,000 Accumulated depreciation (6,306,000) (5,564,000) Land 11,956,000 11,195,000 Accounts payable 5,417,000 6,057,000 Accrued interest 200,000 250,000 Other accrued liabilities 2,325,000 2,030,000 Current tax payable 1,250,000 1,310,000 Dividends payable 4,000,000 4,220,000 Borrowings 5,000,000 6,250,000 Share capital Reserves Retained earnings 21,500,000 20,565,000 500,000 370,000 2,235,000 2,500,000 Additional information: Profit before tax for the year ended 30 June 20X5 was $4,550,000. Plant that was sold during the year had a cost of $500,000 and accumulated depreciation of $258,000. Included in the expenses for the year were depreciation of $1,000,000 and doubtful debts of $900,000. A transfer of $130,000 was made from retained earnings to reserves during the year. Accounts payable relate only to inventory. The tax rate is 30% per annum.