QUESTION 2 (This question has three parts- Part A Part B and Part C)

Part A

MTR Enterprise Ltd had the following equity accounts as at 1 July 2020:

Share Capital (150,000) shares	$2,400,000
Retained Earnings	$1,280,000
General Reserve	$150,000

During the year, the following transactions and events occurred:

July 15, 2020 Declared and paid interim dividend of $0.50 per share.

July 30, 2020 Conducted 3 for 1 share split.

June 30, 2021 Declared a final cash dividend of $0.20 per share and transferred $30,000 from retained earnings to general reserve.

MTR Enterprise Ltds profit for the year ended 30 June 2021 was $240,000.

REQUIRED:

Prepare the equity section of the statement of financial position of MTR Enterprise Ltd as at 30 June 2021.

Part B

Marina Ltd started operation in 2019. Selected accounts of Marina Ltd and their balances for the financial year ending 31 December 2020 are provided below.

Account Name	Debit $	Credit $
Sales Revenue		234,000
Accounts Payable		80,000
Accounts Receivable	75,000
Cost of goods sold	85,000
Salaries Payable		15,000
Cash at Bank	50,600
Share Capital (15,000 shares)		150,000
Inventory	148,000
Prepaid Insurance	28,500
Revenue Received in Advance		10,600
Rent expense	70,000
Bonds Payable		5,500
Salaries expense	38,000

(Question 2 continued on the next page)

Additional information (not included in the figures above):

1. Marina Ltd purchased a car on 1 December 2020 for $18,000, paying $8,000 cash and signing a 2-month note payable for the remaining balance. Interest rate on the note is 12% per annum. The truck is expected to depreciate $3,000 each year.
2. Marina Ltd took out a loan of $80,000 at an annual interest rate of 10% from ICDC Bank on 31 December 2020. The loan is repayable over 5 years with $12,000 of the loan payable within 12 months. No interest is accrued on 31 December 2020.

REQUIRED:

Using the above information, prepare the fully classified Liabilities(current and non-current Liabilities) section of the Statement of Financial Position of Marina Ltd as at 31 December 2020.

PART C

Scotts Ltd. faced a lawsuit from one of its customers. The court is yet to make decision and the amount of any possible obligation cannot be reliably estimated until the judgement is delivered in the next financial year. Therefore, the information is neither reported in the financial statements nor disclosed in the notes to the financial statements.

REQUIRED:

For the situation above, identify and explain the relevant accounting concept/principle violated.