Question 3 Parrock Plc has the following balances on its books at 31 December 2019 Debit Credit 50p Equity shares 20,000 1(6%) preference shares 14,000 Purchases 240,000 Sales revenue 310,000 Inventory at 1 January 2019 20,000 Director's fees 6,000 Retained earnings at 1 January 2019 35,700 10% Debentures 20,000 Debenture interest paid 1,000 Discount allowed 500 Administrative expenses 18,400 Sales staff salaries 18,500 Heating and lighting Selling and disrtibution expenses Rent and rates Trade receivables 2,500 4,000 1,700 14,000 Allowances for doubtful debts at 1 January 2019 300 Trade payables Legend Land and buildings at cost Vans at cost less depreciation 9,700 65,000 19,800 Cash in hand Bank balance 400 2,100 411,800 411,800 Additional information 1. The inventory at 31 December 2019 has been valued at 32,000. Further Investigations reveals that this includes some items originally purchased for 3,000, which have been in Inventory for a long time. They need modification, probably costing about 600, after which it is hoped they will be saleable for between 3,200 and 3,500. Other items, Included in the total at their cots price of 5,000, have been sent to an agent and are still at his premises waiting sale. It cost 200 for transport and Insurance to get them to the agent's premisses, and this amount is included in the selling and distribution expenses.