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Question 1: You are presented with the following trial balance of Winnie Inves...

Oct 6, 2024

It looks like you have a detailed question regarding the preparation of financial statements for Winnie Investment Holdings Limited, as well as some commentary on corporate governance. Let's break this down step by step. a. Statement of Profit or Loss and Other Comprehensive Income To prepare the statement of profit or loss, you will need to calculate the total revenue, total expenses, and then derive the profit or loss for the year. Here’s a simplified structure: 1. Revenue: - Sales:

1,170,828,000 - Less: Sales Return:

0 (as per the trial balance) Total Revenue = $1,170,828,000 2. Expenses: - Cost of Goods Sold (COGS): - Opening Inventory:

22,410,000 - Purchases:

78,300,000 - Closing Inventory: $82,818,000 COGS = Opening Inventory + Purchases - Closing InventoryCOGS = $22,410,000 + $78,300,000 - $82,818,000 = $17,892,000 - Distribution Costs:

680,040,000 - Administrative Expenses:

67,500,000 - Finance Costs:

267,030,000 - Tax:

5,580,000 Total Expenses = COGS + Distribution Costs + Administrative Expenses + Finance Costs + TaxTotal Expenses = $17,892,000 + $680,040,000 + $67,500,000 + $267,030,000 + $5,580,000 = $1,037,042,000 3. Profit Before Tax:Profit Before Tax = Total Revenue - Total ExpensesProfit Before Tax = $1,170,828,000 - $1,037,042,000 = $133,786,000 4. Net Profit:Net Profit = Profit Before Tax - TaxNet Profit = $133,786,000 - $5,580,000 = $128,206,000 b. Statement of Financial Position For the statement of financial position, you will list the assets, liabilities, and equity as of 31 October 2024. 1. Assets: - Non-Current Assets: - Land (revalued):

139,500,000 - Current Assets: - Inventory:

82,818,000 - Trade Receivables:

108,000,000 - Cash:

248,400,000 Total Assets = Non-Current Assets + Current Assets 2. Liabilities: - Non-Current Liabilities: - Bank Loan:

78,300,000 - Current Liabilities: - Trade Payables:

16,020,000 - Bank Overdraft: $76,680,000 Total Liabilities = Non-Current Liabilities + Current Liabilities 3. Equity: - Share Capital: $83,250,000 - Retained Earnings: Previous Retained Earnings + Net Profit c. Corporate Governance Commentary The separation of ownership and control can lead to issues in corporate governance, such as: - Agency Problems: Owners (shareholders) may not have the same interests as managers, leading to decisions that benefit managers at the expense of shareholders. - Lack of Accountability: Managers may not be held accountable for their actions, leading to inefficiencies and potential mismanagement of resources. Strong governance can enhance corporate value by: - Improving Decision-Making: Clear governance structures can lead to better strategic decisions. - Attracting Investment: Investors are more likely to invest in companies with strong governance practices, knowing their interests are protected. Feel free to ask if you need further clarification on any of these points!