QUESTION 1 [35 MARKS] By Fire By Force Ltd is quoted manufacturing company. Its finished products are stored in nearby warehouse until ordered by customers. By Fire By Force Ltd has performed very well in the past, but has been in financial difficulties in recent months and has been reorganizing the business to improve performance. The trial balance for By Fire BY Force Ltd at 31 March 2019 was as follows: N$000 N$000 Sales 124,900 Cost of goods manufactured in year to 31 March 2019(excluding depreciation) 94,000 Distribution costs 9,060 Administrative expenses 16,020 Restructuring costs 121 Interest received 1,200 Loan note interest paid 639 Land and buildings(including land N$20,000,000) 50,300 Plant & equipment 3,720 Accumulated depreciation at 31 March 2018: Buildings Plant and Equipment 6,060 1,670 Investment properties ( at market value) 24,000 Inventories at 31 March 2018 4852 Trade receivables 9,330 Bank and Cash 1,190 Ordinary shares of N$1 each, fully paid 20,000 Share premium 430 Revaluation surplus 3,125 Retained earnings at 31 March 2018 28,077 Ordinary dividends paid 100 7% loan notes 2023 18,250 Trade payables 8,120 Proceeds of share issue 2,400 214,232 214,232 3 Additional information provided: i. The property, plant and equipment are being depreciated as follows: Buildings 5% per annum straight line Plant and equipment 25% per annum reducing balance Depreciation of buildings is considered an administrative cost while depreciation of plant and equipment should be treated as a cost of sale ii. On 31 March 2019 the land was revalued to N$24,000,000 iii. Income tax for the year to 31 March 2019 is estimated at N$976,000. Ignore deferred tax. iv. The closing inventories at 31 March 2019 were N$5,180,000. An inspection of finished goods found that a production machine had been set up incorrectly and that several production batches, which had cost N$50,000 to manufacture, had the wrong packaging. The goods cannot be sold in this condition but could be repacked at an additional cost of N$20,000. They could then be sold for N$55,000. The wrongly packaged goods were included in closing inventories at their cost of N$50,000. v. The 7% loan notes are 10 year loans due for repayment by 31 March 2023. Interest on these loans needs to be accrued for the six months to 31 March 2019. vi. The restructuring costs in the trial balance represent the cost of a major restructuring of the company to improve competitiveness and future profitability. vii. No fair value adjustments were necessary to the investment properties during the period. viii. During the year the company issued 2 million new ordinary shares for cash at N$1.20 per share. The proceeds have been recorded as Proceeds of share issue. You are required to prepare:

a. The statement of profit or loss and other comprehensive income for By Fire By Force Ltd for the year ended 31 March 2019. (11) b. The statement of changes in equity for By Fire By Force Ltd for the year ended 31 March 2019. (7) c. A statement of financial position as at 31 March 2019. (8) Notes to the financial statements are not required, but all workings must be clearly shown. Workings carry additional 9 marks.