Question 3 (40 marka) Happy Fame Limited started opention on 1 December 2019. The most prepared the following Adjusted Trial Balance 31 December 2019. However, the accountant al adjusted for the depreciation and income tax. y Farm Add Time 31 December 2009 C Cash S2000 Inventory Account Table 39.00 Pregulieren Unexpired $9.00 Office supplies Rentale Notepa 310000 Accounts payable $700 Lineamedrentaltres 51200 Divide payable $2.000 Interes puble $500 Share capital ondary $40,000 Shume premium.endinary $160,000 Dividende Sales 560300 Cost of goods sold $1.000 Salarisse Maintenance expense Utilities expense $200 Interesten $500 Office supplies 500 $366.00 5166.600 Required Suppose Happy Farm Limited purchased all real equipment by cash on the first day of business with estimated effe of you and me of $3,000. double declining balance method with partial year depreciation founded to the art full month Prepare the adjusting entry of depreciatice 31 December 2013 mark Prepare the income statement and statement of aid camings for the younded 1 December 2019. Assume an income state of mark ) c) Prepare the statement of financial positive 31 Dec 2019 (12) (Detailed information about the ordinary share ke this, ined and outstanding is not required in this part) Page 1 4 Suppose that Happy Farm Limited started operation December 2019 with authorization of 50,000 shares of $10 per value inayoend 1900 1946 umulative preferon shares of $100 par value Happy Fam had following transactions in 2020 10 Jan Issued 500 preference shares a $120.000 31 Reprchend der har fortal of $50,000 26 Feb Reissued 400 treasury shares at 552 Slan Resad 200 traurys SAE 1) Record the above tractions in 2020 d) Suppose that Happy Farm Limited started operation on 1 December 2019 with authorization of 50,000 shares of $10 par value ordinary shares and 1,000 1% cumulative preference shares of $100 par value. Happy Farm had following transactions in 2020. 10 Jan Issued 500 preference shares for $120,000 cash 31 Jan Repurchased 1,000 ordinary shares for a total of $50,000. 26 Feb Reissued 400 treasury shares at $52. 5 Jun Reissued 200 treasury shares at $48. i) Record the above transactions in 2020. (8 marks) ii) Happy Farm Limited had net income of $84,000 in the year ended 31 December 2020. It declared a dividend $1.6 per outstanding ordinary share and the 1% preference shares' dividend on 30 November 2020, payable on 31 January 2021. Prepare the shareholders' equity section in Happy Farm Limited's statement of financial position at 31 December 2020, according to the format required in IFRS. (8 marks) -End of Section - Question 3 (40 marks) Happy Farm Limited started operation on 1 December 2019. The accountant prepared the following Adjusted Trial Balance at 31 December 2019. However, the accountant had not adjusted for the depreciation and income tax. Credit Happy Farm Limited Adjusted Trial Balance 31 December 2019 Debit Cash $40,000 Inventory $24.000 Accounts receivable $9.900 Prepaid rent $8,000 Unexpired insurance $9,600 Office supplies $600 Rental equipment $240,000 Notes payable Accounts payable Uneamed rental fees Dividends payable Interest payable Share capital - ordinary Share premium - ordinary Dividends $2,000 Sales Cost of goods sold $21,000 Salaries expense $9,300 Maintenance expense $600 Utilities expense $700 Interest expense $500 Office supplies expense $400 $366,600 $100,000 $700 $3,200 $2,000 $500 $40,000 $160,000 $60,200 $366,600 Required a) Suppose Happy Farm Limited purchased all rental equipment by cash on the first day of business, with estimated useful life of 8 years and residual value of $3,000. It uses double declining balance method with partial year depreciation rounded to the nearest full month. Prepare the adjusting entry of depreciation as at 31 December 2019. (3 marks) b) Prepare the income statement and statement of retained earings for the year ended 31 December 2019. Assume an income tax rate of 40%. (9 marks) c) Prepare the statement of financial position as at 31 December 2019. (12 marks) (Detailed information about the ordinary shares like authorized, issued and outstanding is not required in this part.)