At 31st December 20X8, Gist Ltd had the following balances in its accounts: Inventory (1 January 20X8) Accounts receivables Purchases Other operating expenses Rent Cash 000 000 600 480 500 100 200 2,000 420 1,900 Accounts payables Sales Long term loan 900 Ordinary share capital of 1 each 3,500 Share premium 800 Land and Buildings (Land at cost is 800) 2,800 Plant and equipment at cost 1,200 Motor vehicles at cost 600 Accumulated depreciation (1 January 20X8): Plant and equipment 300 Motor vehicles 300 Buildings 180 Retained Profit (1 January 20X8) 180 8,480 8,480 In addition to the above information, the following additional information became available to you at the end of 20X8: 1- Depreciation of plant and equipment is to be provided for at the rate of 10% per annum using the straight-line method. 2- Depreciation of motor vehicles is to be provided for at the rate of 20% per annum using the reducing balance method. 3- Depreciation of buildings is to be provided for at the rate of 2% per annum using the straight-line method. 4- A debtor owing 20,000 to the company has been declared bankrupt. 5- A provision for doubtful debts is to be made at 5% of the remaining trade receivables. 6- The long term loan's interest is 10%, which has not been paid yet. 7- Monthly rent is 15,000. 8- Taxation for the year is estimated to be 150,000 and has not been paid yet. 9- Dividend of 5p/share were paid. 10- Inventory at 31 December 20X8 is valued at cost of 500,000 while its market value is 450,000. Required: (a) Prepare the income statement for the year ended 31/12/20X8 and a statement of financial position as at that date. [30 marks] (b) Explain any two accounting conventions that you have used in preparing the above statements. [5 marks] (c) Discuss the purpose of cash flow statement? List and explain its main three headings. [5 marks]