QUESTION ONE The following trial balance relates to Zambezi Ltd at 31 December 2019. Dr T Cr Equity shares at 50 ngwee each 50,000,000 Retained earings at 1 January 2019 11,200,000 Land and buildings at cost (land K10 million) noteii 6 0,000,000 Plant and Equipment at cost-noteii 94,500,000 Accumulated depreciation at 1 January 2019 - buildings 20,000,000 Accumulated depreciation at 1 January 2019 - plant and 24,500,000 equipment Inventory at 31 December 2019 43,700,000 Trade receivables 42,200,000 Bank overdraft 6,800,000 Deferred tax-note iii 6,200,000 Trade payables 35,100,000 Revenue 550,000,000 Cost of sales 411,500,000 Distribution costs 21,500,000 Administrative expenses 30,900,000 Bank interest 700,000 Current tax-note 1,200,000 Total 705,000,000 705,000,000 The following information is relevant 0 At 31 December 2019, a provision is required for the directors' bonuses equal to 1% of revenue for the year. (1) Non-current assets On 1 June 2019, Zambezi Lid terminated the production of one of its product lines. From this date, the plant used to manufacture the product has been actively marketed at an advertised price of K4.2 million which is considered realistic. It is included in the trial balance at a cost of K9 million with accumulated depreciation (at 1 January 2019) of K5 million. On 1 January 2019, the directors of Zambezi Ltd decided that the financial statements would show an improved position if the land and buildings were revalued to market value. At that stage, an independent valuer valued the land at K12 million and the buildings at K35 million and these valuations were accepted by the directors. The remaining life of the buildings at the date was 14 years. Zambezi Ltd does not make a transfer to retained earnings for excess depreciation. Ignore deferred tax on the revaluation surplus. Plant and equipment is depreciated at 20% per annum using the reducing balance method and time apportioned as appropriate. All depreciation is charged to cost of sales, but has yet been charged on any non-current assets for the year ended 31 December 2019. (II) Zambezi Ltd estimates that an income tax provision of K27.2 million is required for the year ended 31 December 2019 and at that date the liability to deferred tax is K9.4 million. The movement on deferred tax should be taken to profit and loss. The balance on current tax in the trial balance represents the underlover provision of the tax liability for the year ended 31 December 2018. Required: (a) Prepare the statement of profit or loss and other comprehensive income for the year ended 31 December 2019. [7.5 Marks] (b) Prepare a statement of changes in equity as at 31 December 2019. [2.5 Marks] (c) Prepare a statement of financial position as at 31 December 2019. [7.5 Marks] [TOTAL: 20 Marks] QUESTION ONE The following trial balance relates to Zambezi Ltd at 31 December 2019. Dr T Cr Equity shares at 50 ngwee each 50,000,000 Retained earings at 1 January 2019 11,200,000 Land and buildings at cost (land K10 million) noteii 6 0,000,000 Plant and Equipment at cost-noteii 94,500,000 Accumulated depreciation at 1 January 2019 - buildings 20,000,000 Accumulated depreciation at 1 January 2019 - plant and 24,500,000 equipment Inventory at 31 December 2019 43,700,000 Trade receivables 42,200,000 Bank overdraft 6,800,000 Deferred tax-note iii 6,200,000 Trade payables 35,100,000 Revenue 550,000,000 Cost of sales 411,500,000 Distribution costs 21,500,000 Administrative expenses 30,900,000 Bank interest 700,000 Current tax-note 1,200,000 Total 705,000,000 705,000,000 The following information is relevant 0 At 31 December 2019, a provision is required for the directors' bonuses equal to 1% of revenue for the year. (1) Non-current assets On 1 June 2019, Zambezi Lid terminated the production of one of its product lines. From this date, the plant used to manufacture the product has been actively marketed at an advertised price of K4.2 million which is considered realistic. It is included in the trial balance at a cost of K9 million with accumulated depreciation (at 1 January 2019) of K5 million. On 1 January 2019, the directors of Zambezi Ltd decided that the financial statements would show an improved position if the land and buildings were revalued to market value. At that stage, an independent valuer valued the land at K12 million and the buildings at K35 million and these valuations were accepted by the directors. The remaining life of the buildings at the date was 14 years. Zambezi Ltd does not make a transfer to retained earnings for excess depreciation. Ignore deferred tax on the revaluation surplus. Plant and equipment is depreciated at 20% per annum using the reducing balance method and time apportioned as appropriate. All depreciation is charged to cost of sales, but has yet been charged on any non-current assets for the year ended 31 December 2019. (II) Zambezi Ltd estimates that an income tax provision of K27.2 million is required for the year ended 31 December 2019 and at that date the liability to deferred tax is K9.4 million. The movement on deferred tax should be taken to profit and loss. The balance on current tax in the trial balance represents the underlover provision of the tax liability for the year ended 31 December 2018. Required: (a) Prepare the statement of profit or loss and other comprehensive income for the year ended 31 December 2019. [7.5 Marks] (b) Prepare a statement of changes in equity as at 31 December 2019. [2.5 Marks] (c) Prepare a statement of financial position as at 31 December 2019. [7.5 Marks] [TOTAL: 20 Marks]