USB, a limited liability company, has the following trial balance at 31 December 2009.

Cash at bank

Inventory at 1 January 2009 Administrative expenses Distribution costs Non-current assets at cost:

Buildings

Plant and equipment Motor vehicles

Suspense

Accumulated depreciation

Buildings

Plant and equipment Motor vehicles

Retained earnings Trade receivables Purchases Dividend paid Sales revenue Sales tax payable

Trade payables Share premium

Ordinary shares@ GH1

Credit GH000

1,500

4,000 480 120

22,352 The following additional information is relevant.

11,752 1,390 1,050

500 1,000

22,352

Debit GH000

100 2,400 2,206

650

10,000 1,400 320

560 876

4,200 200

(a) Inventory at 31 December 2009 was valued at GH1,600,000. While doing the inventory count, errors in the previous years inventory count were discovered. The inventory brought forward at the beginning of the year should have been GH2.2m, not GH2.4m as above.

(b) Depreciation is to be provided as follows:

(i) Buildings at 5% straight line, charged to administrative expenses.

(ii) Plant and equipment at 20% on the reducing balance basis, charged to cost of

sales.

(iii) Motor vehicles at 25% on the reducing balance basis, charged to distribution costs (c) No final dividend is being proposed.

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(d) A customer has gone bankrupt owing GH76,000. This debt is not expected to be recovered and an adjustment should be made. A further allowance for receivables of 5% is to be set up.

(e) One million new ordinary shares were issued at GH1.50 on 1 December 2009. The proceeds have been left in a suspense account.

Required

a) Prepare the income statement for the year to 31 December 2009,

b) Prepare a statement of changes in equity for the year to 31 December 2009; and

c) Prepare a statement of financial position at 31 December 2009 in accordance with the requirements of International Financial Reporting Standards. Ignore taxation.