Question $2$: Calculation questions

Limited company$-$income statement and statement of financial position

Solar Ltd is a distributor of imported clothes and accessories. The following trial

balance was extracted from its accounting records as at $31$ December $2019$:i$.$ The land was purchased in $2014.$ It was revalued two years ago by Fontons Ltd$,$ an

estate agency, at $2,250,000.$ The directors decided to reflect the revalued amount

in the statement of financial position. On $30$ November $2019$ Fontons Ltd valued

the land at $2,500,000.$

ii$.$ During the year, motor vans, which were bought on $30$ June $2016$ for $300,000,$

were sold for $80,000.$ The sale proceeds have been credited to a disposal account,

but no other entries have yet been made in the company's records with regards to

this transaction. There were no additions to non$-$current assets during the year to $31$

December $2019.$

iii. Buildings are depreciated over $50$ years to zero residual value. Motor vans are

depreciated over $5$ years to zero residual value. The company provides full

depreciation in the year of acquisition and none in the year of disposal.

iv$.$ The inventory held as at $31$ December $2019$ cost $450,000.$ Included in this total is

womenswear costing $120,000,$ which has become out of fashion. In order to sell

these clothes quickly over the next seasonal sales, it has been decided to sell them

at $70\%$ of their cost.

v$.$ Included in trade receivables at $31$ December $2019$ is one of the company's

customers that was recently declared bankrupt, owing $60,000.$ The company does

not expect to collect any of this debt, and has decided to maintain the provision for

doubtful debts at $5\%$ of the remaining trade receivables.

vi$.$ The rent for the shops was paid three months in advance. The last quarterly payment

of $120,000$ was made on $1$ December $2019.$ There were no other types of

prepayments in $2018$ and $2019.$

vii. Three$-$months' interest on the company's $8\%$ debentures was due on $31$ December

$2019$ and remained unpaid. The same amount of interest was due and unpaid at $31$

December $2018.$

viii. Corporation tax for this year is estimated at $230,000.$ For the year to $31$ December

$2018,$ the company had overprovided for corporation tax.

ix$.$ An interim dividend of $9$p per share was paid on $1$ September $2019.$

x$.$ The company issued $100,000$ additional ordinary shares on $1$ October $2019.$ The

proceeds of issue were $150,000.$ The proceeds were paid into a separate bank

account and no entries have yet been made in the company's accounting records

with respect to the cash received or the shares issued.

Required:

Prepare the income statement of Solar Ltd for the year ended $31$ December $2019$ and the

statement of financial position at that date, in a form suitable for presentation to the

directors of the company $($i$.$e$.$ compliance with the accounting requirements of the

Companies Act $2006$ or with IAS$1$ is not required$).$

You should show all workings clearly.