The trial balance extracted from the books of Build A Colourful Company (BACC) at 31 December 2020 was as follows: $ $ 200,000 154,360 90,000 75,000 25,800 40,000 31,784 1540 29,438 Issued share capital Retained earnings at 31 December 2019 Freehold land Machinery at cost Accum.depreciation on machinery at 31 Dec 2019 Property under development Debtors Allowance for doubtful debts at 31 Dec 2019 Creditors Stock at 31 December 2019 Bank Purchases Sales Selling expenses General expenses Wages and salaries Interest expenses Rent Electricity Bad debts 125,689 53,532 201,698 316,180 13,479 18,689 35,200 30,000 9,300 2,489 458 727,318 727,318 Additional information: (1) Stock in trade at 31 December 2020 was $129,142. Wages and salaries due at 31 December 2020 amounted to $918. (111) Rent paid in advance at 31 December 2020 amounted to $300. (iv) The doubtful debts at 31 December 2020 are to be increased to $2,898. A depreciation charge is to be made on machinery at rate of 10% per annum. Further the management has decided to revalue the machinery to $70,000 at year end. The remaining useful life is 10 years. (vi) A valuation carried out at year end has revealed that the recoverable amount of the freehold land has become $80,000. (vii) An amount of $11,500 included in the interest expense was incurred for property under development and is eligible to be capitalized under HKAS 23. (viii) Purchased for cash a Educational Servicing Licence on 1 July 2020 for $20,000. The licence gives BACC exclusive right to sell its services in the Kowloon Tong area and will expire on 1 July 2030. This transaction has not yet been recorded. (ix) Purchased for cash the patent for Accounting Analytics, a sophisticated accounting technology, on 2 January 2020 for $40,000. It is estimated to have a 5 year life. Thi transaction has not yet been recorded. On 1 July 2020, BACC incurred legal fee in a successful defence of the Accounting Analytics patent purchased on 2 January 2020 were $11,400. This transaction has no yet been recorded. Hints: Build A Colourful Company (BACC) Statement of Changes in Equity for the year ended 31 December 2020 Total Share Capital $ Retained Revaluation Profit Surplus $ $ $ At 1 January 2020 200,000 154,360 354,360 Change in equity for the year: Total comprehensive income At 31 December 2020 144,437 Build A Colourful Company (BACC) Statement of Financial Position as at 31 December 2020 $ $ $ Property, plant and equipment Freehold land (net) Property under development (net) Machinery (net) 1.A. - Servicing Licence (net) 1.A. - Patent for Accounting Analytics (net) Current assets Stock Debtors Less: Allowance for doubtful debts Prepayments Current liabilities Creditors Current liabilities Creditors Accrued expenses Bank overdraft Net current assets Net assets Shareholders' equity issued share capital Revaluation surplus reserve Retained earnings 144,437 Suggestion: copy/fill in table above, work on it separately and paste your answer into the answer box. Warning: right answer in the wrong answer box carries no marks Required: (a) Prepare journal entries to record (i) to (x) under additional information. (20 marks) LQ16 (b) (b) Prepare the statement of comprehensive income (single statement) and statement of changes in equity for the year ended 31 December 2020. (12 ma (c) Prepare the statement of financial position of ABC Ltd for the financial 31 December 2020. (10 mar] 216 (d) (d) On 1 July 2021, BACC decided to transfer the usage of the Machinery Investment Property. The fair value of the Machinery is $88,000 on thi transfer and the remaining useful life is 8 years. Prepare journal entri (i) For the transfer of usage on 1 July 2021. (ii) For the year ended 31 December 2021. The fair value of the Machinery on 31 December 2021 is same as transfer, i.e. $88,000. (iii) For the disposal of the Machinery on 31 December 2022 for $100 (8 mar