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Q.2

By December 29, 2021No Comments

Q.2Using the following financial data given,you are required:(a)Prepare a statement of income for internal use for the year ended 31 December 20X1.(b)Prepare a statement of comprehensive income for the year ended 31 December 20X1in the format of functional style of presentation (i.e.,by functions of expenses)(c)Prepare a statement of financial position as at 31 December 20X1.(d)Prepare a statement of changes in equity for the year ended 31 December 20X1.The following trial balance was extracted from the books of Pounds Inc(a UK firm)on 31December 20X1.£’000£’000Sales12,250Returns outwards313Provision for depreciationPlant736Vehicles375Rent receivable100Trade payable738Debentures240Issued share capital-ordinary $1 shares3,125Issued share capital-preference shares (treated as equity)625Share premium350Retained earnings875Inventory825Purchases6,263Returns inwards350Carriage inwards13Carriage outwards125Sales people’s salaries800Administrative wages and salaries738Land100Plant(includes $362,000 acquired in 20X1)1,560Motor vehicles1,125Goodwill1,062Distribution costs290Administrative expenses286Directors’remuneration375Trade receivables4.075Cash at bank and in hand1.74019.72719727Note of information not taken into the trial balance data:(a)Provide for:(i)An audit fee of E28,000(ii)Depreciation of plant at 25%straight-line(ii)Depreciation of vehicles at 20%reducing balance(iv)The goodwill suffered an impairment in the year of E168,0005(v)Income tax of:£548,000(vi Debenture interest of£24,000(b)Closing inventory was valued at f1,115,000 at the lower of cost and net realizable value(c)Administrative expense was prepaid by E13,000(d)Land was to be revalued by£40,000

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