Question one (40 marks) The following financial statement was prepared by the accountant of Real estate Zambia PLC. Real estate PLC. Balance Sheet as at December 31, 2018 Current Assert: Cash K182, 200 Accounts receivable (less allowance of K14, 000 for doubtful account) 220,700 Inventory 2,314,000 Prepayment 360,000 K3, 076,900 Less Current Liabilities; Account payable K206, 400 Accrued payroll 8,260 Accrued interest on mortgage note 12,000 Estimated taxes payable 66,000 292,660 Net working capital K2,784,240 Property, Plant, and Equipment (at cost) Cost Depreciation Value Land and equipment K983, 300 K310, 000 673,300 Machinery and equipment 905,000 338,000 567,000 Leased Equipment 230,700 230,699 1 K2, 119,000 K878, 699 K1, 240,301 Deferred Charges; Prepaid taxes and other expenses 11,700 Interest charged on mortgage note 10,800 1,262,801 Total net working capital and noncurrent assets K4,047,041 Less Deferred liabilities; Mortgage note payable 300,000 Unearned revenue 1,898,000 2,198,000 Total net assert 1,849,041 Stockholders Equity; 6% preferred stock par value K400, 000 Common stock at per value 800,000 Paid-in surplus 210,000 Retained earnings 483,041 Treasury stock at cost (370 shares) (44,000) Total stockholders equity 1,849,041 The statement is not accompanied by notes, but you have discovered the following a) On 31 December 2017 Real Estate Company issued K300, 000 of 10% bonds. The bonds are due on January 1, 2023, with interest payable each July 1 and January 1. The bonds are issued to yield 8% Interest. The accountant forgot to include this transaction in the years 2017 and 2018. b) The unearned revenue includes K100, 000 for the services not yet offered to one of the clients T and T. The terms and condition for this sale was that, on January 1, 2018, Real Estate sold equipment to T and T for K620, 000. This price includes a 2-year assurance warranty service T and T received and paid for the equipment on the same date. The standalone price for the equipment is K600, 000. While that for the warranty service is k100,000 per year.Required: i) Basing on the guidelines of IAS 1 Presentation of financial statement, identify any 5 weaknesses in the financial statement prepared by the accountant above (5 marks) ii)Basing on the guidelines of International Financial Reporting Standard 9, Financial Instruments explain how Real state should record the transaction in( a) above, and prepare the journal entry for both 2017 and 2018. (10 marks) iii) IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors describes the different types of errors and how they should be account for. Explain what type of error has been made by real estate by forgetting to include the issue of the bonds and the effect it will have on the financial statements for 2017(5 marks) iv) Citing relevant accounting standards, critically evaluate the way the transaction in (b) above has been recorded and prepare the correct adjusting journal if necessary(5 marks) v)Prepare the correct statement of financial position and accompanying notes suitable for presentation to shareholders as prescribed by IAS 1 Presentation of financial statement (remember to include the effect of the information in (a) and (b) (10 marks) vi) Explain why the statement you have prepared in (v) will be more preferred by users compared to the one prepared by the accountant above (5 marks)