The accountant of Zabit Co has prepared the following trial balance as at31 December 20X7. stop 50c ordinary shares (fully paid) 7% $1 preference shares (fully paid) 350 10% loan stock (secured) 200 Retained earnings 1.1.X7 General reserve 1.1.X7 242 Land and buildings _X7 (cost) 430 Plant and machinery 1.1.X7 (cost) Accumulated depreciation 830 Buildings 1.1.X7 20 Plant and machinery 1.1 _X7 222 Inventory 1.1 _X7 90 Sales 2,695 Purchases Preference dividend Ordinary dividend (interim) 2,152 Loan interest 10 Wages and salaries 254 Light and heat 31 Sundry expenses 113 Suspense account 135 Trade accounts receivable 179 Trade accounts payable 195 Cash 126 Notes

(a) Sundry expenses include $9,000 paid Concerning insurance for the year ending 1 September 20X8. Light and heat do not include an invoice or $3,000 for electricity for the three months ending 2 January 20X8, which was paid in February 20X8. Light and heat also include $20,000 relating to salesmen's commission.

(b) The suspense account IS in respect to the following Items. stop Proceeds from the issue of 100,000 ordinary shares 120 Proceeds from the sale to plant 300 420 Less consideration for the acquisition of Mary & Co 285 135

(c) The net assets of Mary & Co were purchased on 3 March 20X7_ Assets were valued as follows. stop Investments Inventory 34 265 All the inventory acquired was sold during 20X7_ The investments were still held by Zabit at

(d) The property was acquired some years ago. The buildings element of cost was estimated at $100,000 and the estimated useful life of the assets was tiny years at the time of purchase. On 31 December 20X7, the property IS to be revalued at $800,000. The plant which was sold had cost S350,000 and had a net book value of $274,000 as of 1 _1 _X7. $36,000 depreciation IS to be charged on plant and machinery tor 20X7.

(t) The loan stock has been in issue for some years. The 50c ordinary shares all rank to dividends at the end of one year.

(P) The management wishes to provide tor

(i) loan stock interest due to a transfer to general reserve to $16,000 (iii) audit tees to $4,000

(h) Inventory as at 31 December 20X7 was valued at $220,000 (cost). Taxation is to be Ignored. Required Prepare the financial statements of Zabit Co as of 31 December 20X7 including the statement of changes in equity. No other notes are required.