Question A1 Epictale Trading Ltd is a general wholesaler, and the following trial balance was extracted from the nominal ledger of the company on 31 December 2020: 3% 1 irredeemable preference shares Advertising Allowance for doubtful debts as at 1 January 2020 Bad debt expense HSBC bank loan Buildings at cost Buildings: accumulated depreciation at 1 January 2020 Cash at bank General operating expenses Insurance Interest paid Inventory at 1 January 2020 Land at cost Lighting and heating expense Ordinary dividends paid Ordinary shares of 50p each Petty cash Plant & equipment at cost Plant & equipment: accumulated depreciation at 1 January 2020 Preference dividends paid Purchases Repairs and maintenance Retained earnings/profits as at 1 January 2020 Sales Trade payables Trade receivables Wages and salaries Debit Credit '000 '000 100 258 21 192 320 1,100 242 14 197 101 26 288 339 89 77 380 1 1,471 691 3 2.935 149 1,180 5,152 448 767 527 8,534 8,534 In addition to the above trial balance, you learn the following: 1. Closing inventory at 31 December 2020 was counted and valued at a total cost of 267,000. This valuation includes certain goods with an original cost of 38,000 that had been badly damaged by flooding in the warehouse during December 2020. The scrap value of these goods is now thought to be only 5,000. 2. The trade receivables figure in the above trial balance includes a debt of 17.000 which is believed to be irrecoverable. Additionally, based on a careful analysis of the company's experience with credit collection, the allowance for doubtful debts requires adjusting to 4% of the remaining receivables. 3. The year-end bank reconciliation reveals that bank charges of 4,000 appearing on the company's December 2020 bank statement have so far been omitted from the accounting records. 4. Depreciation is to be charged on the buildings at 2% straight line per year and on plant & equipment at 35% per year using the reducing balance method. 5. The figure for repairs and maintenance on the above trial balance includes a payment for a maintenance contract of 57,000 which covers the six months to 30 April 2021 6. Advertising costs of 23,000 were incurred before the year end but have not yet been accounted for 7. The HSBC bank loan was originally received in 2019 and is repayable in 2024. Interest is payable at an annual rate of 8.125%, and all interest due up to 31 December 2020 has been paid and accounted for. 8. In November 2020 the land was valued at 595,000 by an independent firm of professional valuers. The directors wish to recognise this valuation in the financial statements. 9. The corporation tax due on the profit for the year is calculated to be 82,000. (You should assume that this estimate is unaffected by the various matters above.) Required: Prepare the following financial statements for Epictale Trading Ltd: 1. the Statement of Profit or Loss (or 'Income Statement') for the year ended 31 December 2020; and ii. the Statement of Financial Position (or Balance Sheet') as at 31 December 2020. You should show any workings clearly. (50 marks)