uestion 3 (30 Marks) Inceptus (Pty) Ltd has asked you to help prepare the financial statements for the year ended 30 September 2021. The Trial balance of the company as at 30 September 2021 is set out below: Trial Balance as at 30 September 2021 DR CR N$000 N$000 Ordinary Share Capital 21 000 Interest 900 Trade Receivables 20 200 Trade Payables 15 490 6% Long term loan 30 000 Distribution cost 12 800 Administrative expenses 8 228 Purchases 99 540 Sales 134 840 Retained earnings 17 820 Bank 1 930 Inventories as at 01 October 2020 20 730 Share Premium 5 000 Land (cost) 35 900 Buildings (cost) 12 800 Fixtures and Fittings (cost) 6 950 Motor Vehicles (cost) 17 320 Office Equipment (cost) 5 970 Buildings-accumulated depreciation 9 020 Fixtures and Fittings-accumulated depreciatin 4 370 Motor vehicles-accumulated depreciation 10 030 Office equipment-accumulated depreciation 2 320 Allowance for credit losses 620 Returns inwards 456 Returns outwards 714 Dividend 7 500 251 224 251 224 Other information: The authorized share capital of the company, all of which has been issued consists of ordinary shares with a par value of N$0.50 each. Inventories at the close of business on 30 September 2021 were valued at cost at N$13 870 000. The corporation tax charge for the year has been calculated as N$5 190 000. The land has been revalued up by professional valuers by N$3 200 000. The revaluation is to be included in the financial statements for the year ended 30 September 2021. Goods sold to a customer on credit for N$121 000 in August 2021 which originally cost N$72 000 were returned to the company on 29 September 2021. No entries have been made in the accounts to reflect this return of goods. Allowance for credit losses is to be 5% of accounts receivable balance at the year-end. The company ran a 4 month advertising campaign starting on 1 September 2021 for N$76 000. Depreciation has not been accounted for yet and should be provided as follows: Building at 5% on cost Fixtures and Fittings at 10% on cost Office equipment at 10% reducing balance method Motor vehicle at 20% reducing balance method Motor vehicle at 20% reducing balance method The Building, Fixtures & Fittings and Office equipment are used for administrative purposes. The motor vehicle is used to deliver goods to customers Interest for the last 6 months of the year has not been included in the accounts. The long term loan was acquired on 1 October 2018. This loan is secured by land and building and is payable over a period of 10 years. A repayment of N$3 000 000 is repayable every 31 December of each year. The directors resolved that N$5 million be transferred to the General reserve. REQUIRED: 3.1 Prepare the statement of profit or loss and other comprehensive income for Inceptus (Pty) Ltd for the year ended 30 September 2021 to comply with minimum requirements of companies Act 2008 and International Financial Reporting Standards, using expenses by function. Comprehensive information is not required. [15] 3.2 Prepare the statement of changes in equity for Inceptus (Pty) Ltd for the year ended 30 September 2021 to comply with minimum requirements of companies Act 2008 and International Financial Reporting Standards. Comprehensive information is not required. [8] 3.3 Prepare the notes to the financial statement for the year ending 30 September 2021 to comply with minimum requirements of companies Act 2008 and International Financial Reporting Standards with respect to: [7] i) Statement of compliance ii) Statement of significant accounting policies iii) Borrowings Expert Answer user avatar Anonymous answered this 11 answers Inceptus (Pty) Ltd PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH SEPTEMBER 2021 (Amount in N$) TO OPENING STOCK 20 730 SALES 134 840 PURCHASES 99 540 LESS RETURN 72 456 62 384 LESS RETURN 714 98 826 CLOSING STOCK 13 870 000 Distribution costs 12 800 Administrative expenses 8 228 Interest 900 Dividend 7 500 Corporation Tax 5 190 000 Interest on Loan 1 800 DEPRECIATION Building 640 Fittings&Fixtures 695 Office Equipments 597 Motor Vehicle 3 464 5 396 GROSS PROFIT 85 86 204 ------------------ ----------------------- TOTAL 1 39 32 384 1 39 32 384 =============== ============== Notes: Inventories figures are not proportionate with regard to Opening Stock,Purchases , sales and Closing Stock.