QUESTION TWO: FINANCIAL STATEMENTS OF A COMPANY [25 MARKS] The following list of accounts was extracted from the Trial Balance of RJ Ltd at 31 December 2020:

	R
Share capital issued and fully paid: Ordinary shares 7% Redeemable preference shares	50 000 15 000
Accumulated depreciation of plant and equipment(31/12/2019)	8 250
Accumulated amortisation of patents and trademarks (31/12/2019)	1 500
Plant and equipment at cost (31/12/2019)	90 500
Land and buildings at cost	47 875
Patents and trademarks at cost (31/12/2019)	7 500
Investment at fair value	16 500
Revenue	60 250
Raw material purchased	11 750
Inventory 31 December 2019	15 500
Selling and distribution expenses	3 800
Administrative expenses	22 200
Proceeds on sale of plant and equipment	4 500
Loss on expropriation of land	1 000
Retained earnings 31 December 2019	18 750
Asset replacement reserve 31 December 2019	10 000
Dividends received CJ Ltd	2 700
Bank overdraft	19 500
Trade and other payables	71 525
Trade and other receivables	45 350

Additional information:

1. Trade and other receivables includes provisional tax payments of R7 000.

2. Trade and other payables:

Creditors are secured by plant to the value of R35 000 (payable within one year).

Accrued interest on debentures also forms part of creditors.

3. Administrative expenses include the following:

	R
Interest on bank overdraft	1 450
Auditors' remuneration for audit	1 000
Managing director's salary executive	1 500
Directors' remuneration executive	300
Sundry salaries and wages	15 450
Rent paid	2 500

Property, plant and equipment

-Land with a cost of R15 000 was expropriated during the year. (Loss on expropriation is not tax deductible)

-During the year plant which had a cost of R6 000 was sold for R4 500. The depreciation provided on this plant to 31 December 2019 is R1 250. There were no other sales of plant and equipment during the year.

-Depreciation on plant and equipment must still be provided for the year as follows:

Depreciation from beginning of year to date of disposal of plant R1 000

Depreciation on remaining plant and equipment R3 500

5. The patents and trademarks are amortised over 5 years according to the straight-line method. The amortisation charge for 2020 is R1 500

6. The following must be provided for in the current year:

-Current tax at 28%. It may be assumed that "selling and distribution expenses" and "administrative expenses" do not include any disallowable expenditure for income tax purposes.

-Annual preference dividend.

-Dividends declared to ordinary shareholders of R7 500.

-Asset replacement reserve must be increased to R20 000

7. Inventory is valued at lower of cost or net realisable value and its value at 31 December 2020 is R15 750 REQUIRED: Prepare the Statement of Comprehensive Income for BJ Ltd and the Statement of Changes in Equity for the year ended 31 December 2020. (25 marks)

NB: The implications of capital gains tax, VAT and deferred tax must be ignored. Show all your workings Your answer must comply with the requirements of International Financial Reporting Standards.