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Question 1 [40 marks] You have been asked to help prepare the financial statements of See Boat Ltd for the year ended 30 June 2016. The company's trial balance as at 30 June 2016 is shown below. Debit MUR Credit MUR 100,926 67,231 8,326 7,741 7,280 3,000 50,000 25,000 10,000 Sales Purchases Distribution cost Administrative Expenses Inventory at 1 July 2015 Dividend paid Share capital Share premium Revaluation reserve at 1 July 2015 Land & Building - value/cost Accumulated depreciation Plant and equipment cost Accumulated depreciation Trade & Other receivables Trade & Other payables 5% bank loan Cash and cash equivalents Retained earnings ay 1 July 2015 120,000 22,500 32,000 18,000 20,280 8,725 20,000 2,213 12,920 The following information is relevant to the preparation of the financial statements: 1. The value of inventory for the year ended 30 June 2016 cost MUR 9,420 2. Depreciation is to be provided for the year ended 30 June 2016 as follows: a) Building 4% per annum using straight line method (This should be charged to the administrative expenses) b) Plant and equipment 20% per annum using reducing balance basis. The depreciation charges should be apportioned as follows: Cost of Sales Distribution costs Administrative expenses 70% 20% 10% Land is a non-depreciable item, it is included in the above trial balance at a value of MUR 40,000. At 30 June 2016, an expert value that land to be MUR 54,000. 3. It has been decided to write off a debts of MUR 540 which will be charged to administrative expenses. 4. Included in distribution cost is MUR 2,120 relating to advertising programme which should be run as from 1 January 2016 to 31 December 2016. 5. The loan interest has not yet been accounted for. 6. The tax charged for the year has been calculated as MUR 2,700. Required: Prepare the following: a) Income statement for the year ended 30 June 2016. [15 marks] b) Statement of financial position as at 30 June 2016. [20 marks] c) Explain the different characteristics the financial statement has and how they are important for decision making. [5 marks]