Question 1 The Pineapple Industry Association (PIA) is a government owned enterprise which is legislated to generate its own income which it uses to cover capital and recurrent expenditures. PIA is an agent of National Agriculture Association. The Young Famers association controls 25% of PIA. Outside of these powers, its government also provide Pineapple Industry with monthly subventions to cover its recurrent expenditures based on Pineapple Enterprise budgetary demands and the legal allocations by the government. Pineapple Enterprises uses ISPAP to prepare its financial statements. You were asked by to government to assist Pineapple Industry with its accounting processes, which involved the recording, generation and preparation of accounting transactions and final accounts as stipulated by the IPSASs. Collaborating with a team of qualified and experienced accountants, you were able to prepare the following accounting information of Pineapple Industry for the year ended December 2021. Details 2021 2020 Amount $000 Amount $000 Dividends received from equity investments 10,000 7,500 Service Charge on loans to beneficiaries 70,400 60,500 Gross margin on sale of pineapples 367,308 255,400 Interest on Loans to Members 7,400 8,400 Interest on investments 14,700 15,000 Miscellaneous Income 60 70 Membership Fees 100,020 80,000 Grants Received 50,000 60000 Grants to farmers 350,000 350,000 Donations received 10,000 45,000 Penalties and Fines for breach of Association rules 330 700 Cost of Seminars for Farmers 7,000 6,000 Royalties for use of lands 4,000 3,500 Warehouse Storage 6,000 5,500 General Cleaning & Sanitation 500 1,500 Property Rates 1,000 1,000 Depreciation of Fixed Assets 700 700 Accounting and Consultation Cost 5,000 4,500 Advances to Staff 680 18406 Salaries to Staff (Gross) 200,000 175,000 Staff Contribution to Social Security & Other Statutory Contributions 1,000 750 PIAs Contribution to Social Security & Other Statutory Contributions 3500 2625 Gain on Sale of Equipment 2,000 0 Proceed on the Sale of Equipment 47100 0 Plant, Property and Equipment (at cost, after disposal) 450,000 480,000 Accumulated Depreciation 47,700 47,000 Short-term investments 70,000 30,000 Trade and Other Payables 9360 6700 Cash and Cash Equivalent 2,500 1,500 Inventory at year end 85,000 72,000 Receivables 6,500 10,500 Development Bond Issued 150,000 100,000 Accumulated Surplus 264986 Contribution from Other Government Entities 75,000 75,000 Notes relating to 2021 1. The Accountant for PIA records the transaction on a cash basis. For the 2020 audit adjustments were made to reflect the basis required for ISPAS. The audit was completed for 2020, therefore, those figures are final. The 2021 figures are not yet finalized. 2. Dividends received included $4,200,000 relates to amounts receivable on 31 December 2020. Dividend receivable as of 31 December 2021 is $1,100,000. 3. PIA receives an annual transfer of $30,000,000 for the National Agricultural Association for the operating of the industry. 4. Service Charge Outstanding as at 31 December 2021 was $442,000. 5. Interest receivable on Loans to Members as at 31 December 2020 received in 2021 was $2,080,000. Interest receivable at 31 December 2021 was 5,000,000. 6. All membership fees were paid in full. Ten members prepaid their membership for 6 months at $12,000 per month. 7. Only 80% of the Grants Committed were received. The Grants are normally received on a quarterly basis. 8. To secure adequate storage in 2021, payments of 1,612,000 was made in advance. 9. All the surplus, except 25% which are for several associates, are returned to the National Agriculture Association. 10. Bond issued in 2020 was issued for 200,000,000. There was a repayment of $50,000 in 2021. 11. All statutory was paid at year end Required: i. Statement of Financial Performance, Statement of Financial Position and Cash flow for 2021 in line with ISAPS. Expenses should be classified by nature. No comparative data required for the Cashflow. (50 marks) ii. A Junior Accountant recently joined PIA, as the Senior Accounting Officer explain the budgetary process. (10 marks)