Question 2 Emiria makes components for the motor industry, buying in plastic and metal raw materials from the UK and overseas. Her factory contains mostly quite old machinery, some of which is fully depreciated. She incurs relatively high labour and maintenance and repair costs. Emiria would like to borrow more money from the bank: to invest in new plant and machinery so as to bring the production processes up to date and reduce labour costs. The bank: manager has told her, however, that she must take steps to reduce her overdraft before the bank: will consider lending any more money. The following is Emiria's list of balances at 31 December 2016 together with some notes that will help in preparing the accounts. Accounts RM Land 13,850 Plant and machinery (At cost) 93,450 Buildings (At cost) 50,000 Accumulated depreciation at 1 January 2016: Buildings 9,000 Accumulated depreciation at 1 January 2016: Plant and machinery | 87,482 Bank loans (long term 10,000 Bank overdraft 28,411 Rates and taxes 6,769 Capital at 1 January 2016 32,229 Creditors 24,459 Debtors 46,242 Direct labour costs 79,690 Drawings 39,511 Electricity 10,710 Factory supervisor's salary 14,778 Finished goods 1 January 2016 39,451 Finished goods 31 December 2016 39,750 Import duties on purchases of raw materials 1,570 Purchases of raw materials 97,010 Raw materials 1 January 2016 16,333 Raw materials at 1 December 2016 15,250 Sales 337,570 Secretarial and clerical staff 12,760 Sundry administration and selling expenses 1,670 Work-in-progress 1 January 2016 6,440 Work-in-progress 1 December 2016 6,693 Note the following: The depreciation for plant and machinery for 2016 is RM3,130. Depreciation is charged on the cost of buildings at 2% per annum on the straight line basis. The charge is split between the factory (80%) and the administration office (20%). Electricity expenses are to be allocated equally between factory and administrative office. You are required to answer the following questions: (a) Prepare a Statement of Cost of Production for Emiria for the year ended 31 December 2016. (8 Marks) (b) Prepare a Statement of Comprehensive Income and Statement of Financial Position for the year ended 31 December 2016. (12 Marks) (c) Advise Emiria on how she can help to reduce her overdraft and borrow more money for investment in new plant and machinery