You are provided with the trial balance of Trident DAC as at 31st December 2020:

Buildings at cost 1,650,000 Equipment at cost 695,000 Vehicles at cost 285,000 Accumulated depreciation at 1 January 2020:

Buildings Equipment Vehicles 660,00

Inventory at 1 January 2020 165,000 Trade receivables 455,000 Trade payables 124,000 Allowance for doubtful debts at 1 January 2020

Bank 962,000

Ordinary shares at 1 each 240,000 Share Premium 120,000 Retained earnings at 1 January 2020 234,765

6% debentures (repayable 2030) 2,200,000

Revenue 2,456,000 Purchases 1,076,000 Directors fees 100,000 Wages and salaries 391,500 Distribution costs 225,000 Administration expenses. 197,000 Dividend paid. 80,000 Debenture Interest. 100,000 Rents received 78,000 Purchases returns 35,000 Bad debts 32,000 Light and Heat 32,000

6,445,500. 6,445,500

You are provided with the following information:

6,445,500 6,445,500

660,000 208,500 77,235

124,000 12,000

78,000

1. a) The company's Inventory at31 December 2020 is valued at 135,000.

2. b) Included in administration expenses is an insurance premium of 12,600 which was paid on 1 April 2020 for the year to 31 March 2021.

3. c) Invoices for light and heat for November and December 2020 which amount to 3,200 were not received or paid until January 2021.

4. d) Rent received on the trial balance relates to rental income from a tenant for the period from 1 July 2020 to 30 June 2021.

5. e) The financial controller has just received a letter from a credit customer stating that their business went into liquidation on 20th of December 2020 and they will not be able to pay any of the 26,000 owed to Trident DAC. The allowance for doubtful debts should be set at 8% of outstanding trade receivables at the year end.

6. f) The corporation tax liability for the year to 31 December 2020 is estimated to be 25,000 and debenture interest must be provided for.

7. g) On 28th of December 2020 Trident DAC disposed of equipment which had cost 160,000 when purchased on 1 May 2017. The proceeds of sale were agreed at 70,000 and the buyer paid this amount on 6 January 2021. No entries have been made in the accounting records for 2020 regarding this transaction.

8. h) Depreciation has yet to be charged for the year ended 31 December 2020. The company depreciates buildings on a straight-line basis over a 25-year period, assuming no residual value. Equipment is depreciated on a reducing balance basis using a rate of 15% per annum. Vehicles are depreciated over a 10-year period, assuming no residual value. In all cases, a full year's depreciation is charged in the year of acquisition and none in the year of disposal.

Required:

1. Show the journal entries necessary to record the additional information

   required in a), b), c), d), e) and f) above.

2. Prepare a Statement of Profit or Loss and a Statement of Changes in Equity for the year ended 31 December 2020 and a Statement of Financial Position as at 31 December 2020.

3. Show all workings required for part 2.

4. Explain the concept of Prudence and show one example of how this is applied in the case of Trident DAC in the year ended 31 December 2020.