Question 2 (40 marks) Quantum Ltd is a business that has traded for many years. The following balances were extracted from the general ledger on 30 September 2018. Quantum Ltd Trial balance as at 30 September 2018 Dr (NS) Cr (NS) Sales 2,895,000.00 Purchases 2,100,000.00 Interest on debentures 20,000.00 Salaries 254,000.00 Advertising 31,000.00 Trade receivables 179,000.00 Trade payables 295,000.00 Cash at bank 126,000.00 Dividend payable 50,000.00 Discount receivable 2,530,00 Stationery 45,550,00 Miscellaneous expenses 113,000.00 Bank charges 8,750.00 Allowance for credit losses 8,970.00 Credit losses 1,700.00 Ordinary share capital (N$ 0.50 per share) 600,000.00 8% Preference share capital 250,000.00 10% debentures 400,000.00 Retained earnings (01 Oct 2017) 242,000.00 General reserve (01 Oct 2017) 171,000.00 Share premium 65,000.00 Land and Building at cost (01 Oct 2017) 430,000.00 Building - Accumulated depreciation (01 Oct 2017) 20,000.00 Page 12 of 27 830,000.00 222,000.00 Plant and Machinery at cost (01 Oct 2017) Plant and Machinery - Accumulated depreciation Vehicles at cost (01 Oct 2017) Vehicles - Accumulated depreciation (01 Oct 2017) Inventory (01 Oct 2017) 1,275,000.00 382,500,00 190,000.00 5,604,000.00 5,604,000.00 Additional information: 1. Inventory as at 30 September 2018 was valued at N$ 220 000. 2. Provide for income tax at 32% 3. Plant which costs NS 350 000 with a carrying amount of N$ 274 000 on 1 October 2017 was sold for NS 300 000 deposited into the bank account, this amount was erroneously omitted from the business records. Depreciation charge for plant and machinery for the ended 30 September 2018 is NS 36 000. Plant and machinery relates to production. 4. The property which is mainly used for administrative purposes was acquired five years ago. The building portion was estimated at a cost $ 100 000 and the estimated useful life of this property was fifty years at the time of purchase. As at 30 September 2018, the property was valued at NS 800 000 5. Miscellaneous expenses include N$ 9 000 paid in advance for insurance up to 31 May 2019 and an amount of NS 15 000 relating to sales commission. Apart from sales commission miscellaneous expenses relate to administration, 6. Depreciation charge for vehicles for the year ended 30 September 2018 is N$ 75 000. This is to be allocated as follows: Administration: 75% Selling and distribution: 25% 7. On 30 September 2018 an invoice for N$ 3 000 was received for advertising. Page 13 of 27 8. Allowance for credit losses was to be reduced to N$ 8 000. 9.8% preference shares are part of equity 10. The management wishes to provide for the following: Interest on debentures due A transfer to general reserve of N$ 22000 Auditors fee NS 15 750 You are required to: 1. Prepare a statement of profit or loss and other comprehensive income for the year ended 30 September 2018. It should comply with the requirements of the Companies Act 71 of 2008 and International Financial Reporting Standards (IFRS) (15 marks) 2. Prepare a statement of financial position as at 30 September 2018 to comply with the requirements of the Companies Act 71 of 2008 and IFRS. (16 marks) 3. Prepare the notes to the financial statements for the following: (9 marks) 3.1 Basis of presentation 3.2 Summary of significant accounting policies 3.3 Trade and other receivables 3.4 Equity Page 14 of 27