The following is the Trial Balance of Smokefire Plc as at 31 March 2020.

K000 K000

Development Costs 135 000

6 percent Loan notes 78 400

6 percent loan interest paid 4800

Financial Assets 185 000

5 percent Convertible preference shares 140 000

5 percent preference dividend paid 8500

Cost of sales 286410

Bank 28820

Revenue 675850

Administrative expenses 45000

Trade payables 76 700

ordinary shares 190 000

Share premium 35000

Income Tax 3400

Inventory at 31 March 2020 89500

Plant and Machinery at cost 200 000

Accumulated Depreciation at 1 April 2019-Plant 63400

Trade Receivables 40 000

Deferred Tax 18780

Retained earnings 320 000

Land and Buildings at valuation 440 000

Distribution Costs 52 500

Reseach and Development Expenditure 86 000

TOTAL 1 601 530 1 601 530

ADDITIONAL INFORMATION:

-Estimated income tax on current year's profit is K18 000. The provision for deferred tax should be K12 250. The balance in the trial balance is an overprovision of tax relating to the preceding year.

-An item of inventory that cost K28 million and included in the total figure of inventory in the trial balance can be sold for K35 million and only after repairs are done to it at a cost of K12 million.

-The financial assets satisfy the required tests to be hold them to maturity,though they have a 70 percent probability that they can be transferred to an interested buyer, At 31 March 2020 their fair value was estimated to be K160 million,

-Buildings have always been used as investment property. On 1 October 2019 the directors decided to occupy it for the remaining life of 40 years to use it as office accommodation. The buildings include land valued at K140 000, The property had life of 50 years when constructed. Depreciation of building should be taken to Administration expenses.

-The directors decided to change the method of depreciation of plant and equipment from straight line to reducing balance method. Therate still remains the same 20 percent. Depreciation has not been charged on all assets. Depreciation of plant and equipment is taken to Cost of sales.

-The 6 percent loan note have a nominal value of K80 million and were issued in the year at a discount of 2 percent. Issue costs incurred amounted to K820 000 and are inclueded in administration expenses .The loan notes will be repaid at a premium in 2028.The effective rate of interest is 9 percent.

-The 5 percent convertible preference shares were issued on 1 April 2018. Their par value is K140 000 and redeemable at 31 March 2023. They were issued together with an option under which K100 of the share value would be converted to 200 ordinary sharess. The equivalent bond without the conversion option would have carried an interest rate of 9 percent. The preference dividend was paid on 31 March 2020.

- The capitalised development costs include K65 000 attributable to project , MG-X, for which the estimate of future revenue hasn significantly reduced. The amount spent on reseach and development in the current yera and included in the cost of sales is made up of the following : research K8 million, expenditure in respect of the project GM-X, K12 MILLION AND K26 million that meet the IAS 38 criteria for capitalisation.

PREPARE (1) The statement of profit and loss and other comprehensive income for the year ended 31 March 2020

(2) a statement of changes in equity

(3) a statement of financial position as at 31 March 2020