1. Regina is a shoe production factory. In January, they made purchases of 80,000kgs of raw materials at the cost of P15 per kg. The company pays its labour at P7 per hour worked on a pair of shoes. It takes 4 hours and 2kgs to manufacture a pair of shoes. Other direct production costs incurred for the year ended 31^ST December 2020 were P12 a pair. At the end of the year there were 25 finished pairs left in store after each pair was sold on the mark up of 20%. Of those pairs in store, 11 seemed to have a problem and will therefore be sold after a bit of a repair at 5% less price than a normal price. The repairs before sale will be P25 per pair.

Required: Calculate the correct amount to value the finished inventory for the year ending 31^st December 2020. (10 marks)

2. Your Manager Mrs. Mutusi recently attended a conference in Dubai entitled, Assistance Government grants

for Africa. The meeting was so insightful and a lot was discussed, it was one of an eye opener for me, he

said. The only sad thing is that I lost my note book where I jotted my notes with regards to government

grants, he added. Mrs. Mutusi then asked you to prepare brief notes on key issues with regards to

government grants, of which you did.

After you explained to her, Mrs Mutusi is so much excited about the concept of a Government grant. She decided to take action and put theory into practice. She instructed you as an Accountant to apply for a government grant for the acquisition of Machinery. Your application was successfully submitted to the Ministry of Trade and Investment and they were happy with it because the Ministry wants to support local investors. In a weeks time, your organization, Ditiro Ltd, received a favourable response. The company was given a Government grant of P10 000 000 to acquire an Asset costing P100 000 000 depreciating at 20% straight line.

Required

Assume that your company uses Income based Approach to account for grants from the Ministry, prepare the extracts of the financial statements for the 5 year period 2019-2023, assuming that the letter informing your of your companys successful application of the grant was received on 7 January 2019. (15 Marks)