Instruction: This question is compulsory - Suggested time 50 minutes The following balances were obtained from the books of Bradley Co. Limited for the year ending December 31, 2023. DETAILS Goodwill Premises DR CR 180,000 400,000 10% Debenture Retained Earnings Debtors Creditors General Reserves 160,000 75,500 170,000 55,000 80,000 Management Expenses 65,000 Ordinary Shares @ $0.50 300,000 10% Preference Shares @ $1.00 150,000 Motor Vehicles 160,000 e. Goodwill was amortised by 25% Prov. For Depreciation on Motor Vehicle 10% Secured Loan 20,000 100,000 f. Corporation tax is estimated at $25,000. Sales 1,650,000 Cost of Sales 1,150,000 Fixtures and Fittings 80,000 Prov. For Depreciation on Fixtures & Fittings 20,000 Stock at December 31, 2023 145,100 Loan Interest Paid 4,000 Insurance 12,000 Directors Fees 40,000 Debenture Interest Paid 14,000 Interim Ordinary Shares Dividends 5,000 Cash and Bank 90,600 Wages and Salaries 125,000 2,625,600 2,625,600 Additional Information: a. Provide for depreciation as follows: Fixtures and Fittings @10% on the straight line, motor vehicle @10% on the reducing balance. b. Wages and salaries for $15,000 is owing; while insurance is prepaid by $3,000 c. On December 21, 2023 the directors approved the payment of the preference share dividends. d. The following appropriation of expenses was recommended; ADMIN SELLING OTHER g. Transfer $15,000 of profits to the general reserves. Required: (a) A Statement of Profit or Loss (b) A Statement of Changes in Equity (15 marks) (10 marks) (c) At a recent board meeting of the Bradley company limited a member of the board questioned the policy of the organization in making dividend declaration. He presented some theories of dividend policy but failed to explain the bird-in-hand theory. As the financial controller of the company you were asked to explain the bird-in-hand theory. Briefly explain the bird-in-hand theory. (5 marks) (d) Define the term "Associate" in Consolidated Financial Statements and explain the term 'significant influence' and the treatment of associate firms. (5 marks) & DIST OPERATING Wages & Salaries 75% 25% Insurance 1/3 2/3 Management Fees 60% 40% Directors Fees 100% Depreciation Charges 50% 50%