The following list of balances were extracted from the books of Marlon Ltd for the year ending

$31$st March $2022.$

K$$ K$$

Purchases and Sales $100,2001,975,500$

K$0\mathrm{.}50$ Ordinary Shares $1,781,080$

Revaluation Reserve $292,000$

General Reserve $64,000$

Retained Earnings $132,621$

Goodwill $775,750$

Plant and Machinery at cost $1,912,000$

Accumulated depreciation$-$Plant and Machinery $94,000$

Buildings at cost $1,237,251$

Motor Vehicles at cost $577,000$

Accumulated depreciation$-$Motor vehicles $82,000$

Inventory$-1$ April $2014396,000$

Trade Receivables and Payables $1,010,000637,000$

$10\%$ loan notes $622,000$

$15\%$ loan notes $630,000$

$25\%$ loan notes $808,000$

Cash and cash equivalents $510,000$

General administrative expenses $400,000$

Suspense $200,000$

$\_\_\_\_\_\_\_\_$

$7,118,2017,118,201$

Additional Information

$1.$ Closing inventory at the year$-$end has a purchase price of K$600,000$ before accounting

for a $10\%$ discount and paying $15\%$ import duty and $25\%$ VAT. Professional fees of

K$50,000$ are incurred in getting the inventory ready for sale while warehouse storage

costs are K$75,000.$The inventory can be sold for K$699,000$ after incurring marketing

expenses of K$9,000,$ transportation costs of K$4,000$ and paying sales representatives

K$16,000.$

$2.$ The balance on the suspense account is due to the following errors:

a$.$ Accumulated depreciation on plant and machinery was under cast by K$10,000$

b$.$ Cash purchases of K$30,000$ were credited to both the cash and purchases

account.

c$.$ Purchase of a motor vehicle worth K$40,000$ was recorded only in the bank

account.

d$.$ K$55,000$ for general administrative expenses was credited to the general

administrative account.

$3.$ The building is a qualifying asset and was built from the $15\%$ and $25\%$ loan notes. All

three loans were taken out at the beginning of the year and a full year$$s interest has also

accrued on the $10\%$ loan note.

$4.$ Plant and machinery is depreciated at $35\%$ on reducing balance and charged to

administrative expenses. Motor vehicles are depreciated over $5$ years on a straight$-$line

basis and charged to selling and distribution costs.

$5.$ Goodwill, plant and machinery and motor vehicles represent a cash generating unit.

The net realisable value is unknown but equal cash flows of K$208,057$ are expected

from the unit over the next five years. Inflation is expected to be $12\%$ per annum.

$6.$ Equipment with a fair value of K$100,000$ was leased at the beginning of the year. An

initial payment of K$25,000$ was made at the beginning of the contract and equal

payments of K$20,806$ are expected to be made at the end of each year for $5$ years. The

interest rate implicit on the lease is $12\%$ per annum and the actuarial method is used to

amortise the loan. The interest payment was made on $31$st March $2022.$

$7.$ A new government regulation came into effect at the end of the year and the company

is expected to incur clean$-$up costs of K$60,000$ at one of its mines on $31$st March $2025.$

$8.$ A transfer to general reserves of K$15,000$ is required and a dividend of K $0\mathrm{.}50$ per

share was paid during the year.

Required

a$)$ Prepare the Statements of profit or loss and other comprehensive income, financial

position and changes in equity for Marlon Ltd for the year to $31$st March $2022$ in

accordance with IAS $1$ Presentation of Financial Statements.