Question 4 (35 Marks) ABC Limited was incorporated in 2010 with an authorized capital consisting of 40 000 000 ordinary. shares. You have been asked to help prepare the financial statements of ABC Ltd for the year 31 December 2020. The company's trial balance as at 31 December 2020 is shown below: 8% Debentures (redeemable 2026) Accruals Administrative expenses Cash at bank Distribution costs Final dividend for the year ended 31 December 2020 Interst Interim dividend for the year 31 December 2020 Dr N$'000 6 888 19 308 4 900 1080 1 120 780 8932 79 760 Inventories as at 1 January 2020 Property, Plant and Equipment Accumulated depreciation at 1 January 2020 Purchases 65 552 Retained earnings Returns inwards Returns outwards Sales Share Capital Accounts and other payables Accounts and other receivables 688 Cr N$'000 28 000 292 43 560 6930 446 93 554 18 000 2 694 4468 193476 193476 Additional information: 1. The share capital of the company consists of ordinary shares with a nominal value of N$1 each. 2. The inventories at the close of business on 31 December 2022 were valued at N$9 974 000, this consists of: a) Raw materials b) WIP c) Finished goods N$3 500 000 N$3 550 000 N$2 500 000 N$424 000 d) Consumable stores 3. The company paid N$1 440 000 for one year's insurance on 1 February 2020, this is due to expire on 31 January 2021. This should be allocated to administration. 4. The company hired vehicles to distribute finished goods locally. It was able to negotiate a deal with a local company for the period 1 September to 30 November 2020 at a cost of N$198 000. This was invoiced on 6 December 2020 and paid in full on 1 March 2021. No entry has been made in the accounts. 5. Interest on the bank loan for the last six months of the year has not been included in the accounts in the trial balance. 14 FACULTY OF COMMERCE, MANAGEMENT AND LAW 6. Depreciation for the year amounts to N$300 000, a half of this amount is to be apportioned to cost of sales and the remaining balance equally between distribution costs and administrative expenses. 7. The company made a bonus issue of 2 500 000 ordinary shares out of retained earnings but has not made any accounting entries for this. 8. The tax charge for the year has been calculated as N$1 960 000. REQUIRED: 4.1 4.2 4.3 Marks Prepare the statement of profit or loss and other comprehensive income for 13 ABC Ltd for the year ended 31 December 2020 to comply with minimum requirements of companies Act 2008 and International Financial Reporting Standards, using expenses by function method. Comprehensive information is not required. Statement of financial position as at 31 December 2020 to comply with the 10 requirement Companies Act 71 of 2008 and International Financial Reporting Standards (IFRS). Comparative information is required Prepare the notes to the financial statement for the year ending 31 December 12 2020 to comply with minimum requirements of companies Act 2008 and International Financial Reporting Standards with respect to: i. Statement of compliance ii. Statement of significant accounting policies iii. Inventory iv. Revenue V. Share capital Total 35