The following balances have been extracted from the books of Textiles Limited, a cloth manufacturer and wholesaler,
Question:
The following balances have been extracted from the books of Textiles Limited, a cloth manufacturer and wholesaler, at 30 June 2016:
Additional information
• Audit and accountancy fees (to be charged to administration expenses) of £10,000 have not been taken into account at 30 June 2016.
• Administration expenses include payments for insurance premiums of £30,000 for the 12 months to 31 December 2016.
• Since the year end, a customer of Textiles Limited has gone into liquidation owing £50,000.
Textiles Limited does not expect to receive any cash from this trade receivable.
• The provision for doubtful debts is to be adjusted to 4% of trade receivables after deducting known bad debts. All bad and doubtful debts are to be charged to administration expenses.
• Depreciation for the year to 30 June 2016 still has to be calculated. Plant and machinery is to be depreciated at 20% straight line and motor vehicles are to be depreciated at 25% reducing balance. Plant and machinery depreciation should be charged to cost of sales and motor vehicle depreciation should be charged to distribution and selling expenses.
• Taxation on the profit for the year is to be calculated as 25% of the profit before tax.
Required
Prepare the income statement and statement of financial position in a form suitable for publication in accordance with International Financial Reporting Standards.
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