Whilst preparing its financial statements for the year ended 30 June 2010, Ibex plc discovers that the sales figure for the year ended 30 June 2009 had been understated by EUR 200,000 as a result’of a mathematical error. ‘Trade receivables at 30 June 2009 had been understated by the same amount. This error is regarded as material. 

The company’s draft income statement for the year ended 30 June 2010, before correcting this error, is as follows: 

Retained earnings at 30 June 2008 were EUR 1,720,000. No dividends were paid during the two years to 30 June 2010. It may be assumed that the company’s tax expense each year is equal to 20 pre cent of the profit before taxation. 

(a) Prepare an income statement for the year ended 30 June 2010, showing restated comparative figures for the year ended 30 June 2009. 

(b) Compute the company’s retained earnings at 30 June 2010 and the restated retained earnings at 30 June 2009.

Transcribed Image Text:

Sales Cost of sales Gross profit Expenses Profit before taxation Taxation Profit after taxatin 2010 000 3,320 (1,340) 1,980 (1,180) 800 (160) 640 2009 000 3,480 (1,460) 2,020 (1,120) 900 (180) 720