SECTION A: COMPULSORY QUESTION INSTRUCTION: You must attempt this question. Question 1 (40 marks) On t and sell widgets. T ending 31 December 2015- anuary 2015 Plunkett Manufacturing Company Limited was formed to make pcen The folowing information is available for its first year of trading 1. On 1" ea che Jlanuary, 2 million ordinary shares were sold at their par value of 1 anuary 1.6 million was borrowed short-term from a bank, at 6% ber. No per year interest. The interest was paid at the end of Decem interest on positive cash balances was received during the year 3. In early January 200,000 was paid in cash for two years premises rental 4. In early January a machine was purchased for 2.400,000. The machine will last for 10 years and have a zero residual value at the end of this period. The straight line method of depreciation will be used. 5. During 2015, ,000) widget castings were bought at 100 each 480,000 was pard in cash during the year, and the rest was stifl owing at the year-end 6. Operators' wages of 480,000 were paid. 7. During 2015, all 6,000 widget castings were machined by the operators into finished widgets. 8. During 2015, 5,000 finished widgets were sold at 400 each. E1,800,000 cash was received, and 200,000 was still receivable at year-end. Of the year-end receivables, 20,000 was not expected to be collected as the company had gone bankrupt. 9. (nventory must be valued at full cost, and hence an appropriate of both operators' wages)and depreciation must be included 10. Managers' salaries of 240,000 were paid. 11.At the end of 2015, 1 million of the bank loan was repaid. 12-Corporate tax for 2015 was provided for at 20% of profit before tax. None of this was paid during 2015. 13.A dividend of 160,000 was paid in cash to shareholders during 2015. Page 2 of 1 Required:- () Prepare an Income Statement for Plunkett Manufacturing Company Limited for the year to 31 December 2015. (10 Marks) (i) Prepare a Statement of Financial Position (SoFP) for Plunkett Manufacturing Company Limited at 31 December 2015. (20 Marks) NOTE: work in 000, rounding where necessary. Show your workings clearly (including the cash balance which should be fully calculated and not just the balancing item in the SoFP), and present a "clean" copy of the requested two documents. If you make any assumptions, explain thenm briefly (i) Explain the main reasons why the annual profit reported by a typical manufacturing company may be subject to a significant margin of error. Answer generally, not specific to Plunkett. (10 Marks) (Total 40 marks)