6.21 LO4 Presented below is a draft set of financial statements for Chips Ltd.

CHIPS LTD Income statement for the year ended 30 June 2017

$’000 Revenue 1,850 Cost of sales (1,040)

Gross profit 810 Depreciation (220)

Other operating costs (375)

Operating profit 215 Interest payable (35)

Profit before taxation 180 Taxation (60)

Profit for the year 120 CHIPS LTD Statement of financial position as at 30 June 2017 Cost $’000 Depreciation $’000 $’000 ASSETS Current assets Cash at bank 16 Accounts receivable 420 Inventories 950 1,386 Non-current assets Motor vehicles 102 (53) 49 Plant and equipment 650 (367) 283 Buildings 800 (112) 688 1,552 (532) 1,020 Total assets 2,406 LIABILITIES AND EQUITY Current liabilities Accounts payable 361 Other payables 117 Tax 60 538 Non-current liabilities Borrowings (secured 10% notes) 700 Equity Ordinary shares issued at $1, fully paid 800 Reserves at beginning of the year 248 Profit for the year 120 1,168 Total liabilities and equity 2,406 The following additional information is available:
1 Purchase invoices for goods received on 29 June 2017 amounting to $23,000 have not been included.
This means that the cost of sales figure in the income statement has been understated.
2 A motor vehicle costing $8,000, with depreciation amounting to $5,000, was sold on 30 June 2017 for $2,000, paid by cheque. This transaction has not been included in the company’s records.
3 No depreciation on motor vehicles has been charged. The annual rate is 20% of cost at year-end.
4 A sale on credit for $16,000, made on 1 July 2017, has been included in the financial statements in error. The cost of sales figure is correct in respect of this item.
5 A half-yearly payment of interest on the secured loan, due on 30 June 2017, has not been paid.
6 The tax charge should be 30% of the reported profit before taxation. Assume that it is payable, in full, shortly after year-end.
Prepare a revised set of financial statements incorporating the additional information in 1–6 above.
(Work to the nearest $1,000.)