You are provided with the following trial balance of Fenderzo, a limited liability company, at 31 December 2020. Dr Cr 110,000 20,000 5,000 80,000 200 400 1,000 800 10,000 10,000 12,000 50,000 Ordinary share capital (50p each) 5% Preference share capital (1 each) Share premium Sales revenue Discount Carriage inwards Carriage outwards Receivables and payables Inventory at 1 January 2020 10% debentures 2023 Debenture interest paid Long term investments Premises, at cost Machinery, at cost Machinery, accumulated depreciation Purchases Administrative expenses Salaries Preference dividend paid Retained profit 1 January 2020 Cash at bank Goodwill Preliminary expenses 5,000 50,000 100,000 130,000 100,000 49,000 4,000 4,000 1,000 8,000 5,000 13,000 2,000 385.200 385.200 Adjustments are required for the following transactions: (i) Inventory at 31 December 2020 valued at cost 15,000 and market value 20,000. (ii) Directors' remuneration not yet paid 5,000. (iii) Tax for the year is 25%. (iv) Depreciation charge on machinery is 10% on cost. (v) Accrued audit fee 1,000. (vi) Premises have been revalued at 130,000 - the surplus on revaluation is to be transferred directly to a Revaluation Reserve. (vii) Goodwill of 500 has been written off. (viii) Write off the Preliminary Expenses by transfer from the Share Premium Account (ix) Dividends of 10% are due on the Long Term Investments. Required: (a) Prepare a Statement of Profit or Loss Account for the year ended 31 December 2020 and Statement of Financial Position as at 31 December 2020. [23] (b) Provide an example of revenue reserve and an example of capital reserve. Explain each example [2]