The following is a draft set of simplified financial statements for Pear Limited for the year ended 30 September 2011.

Income statement for the year ended 30 September 2011

£000 Revenue 1,456 Cost of sales (768)

Gross profit 688 Salaries (220)

Depreciation (249)

Other operating costs (131)

Operating profit 88 Interest payable (15)

Profit before taxation 73 Taxation at 30% (22)

Profit for the year 51 Exerci ses 167 Statement of financial position as at 30 September 2011

£000 ASSETS Non-current assets Property, plant and equipment Cost 1,570 Depreciation (690)

880 Current assets Inventories 207 Trade receivables 182 Cash at bank 21 410 Total assets 1,290 EQUITY AND LIABILITIES Equity Share capital 300 Share premium account 300 Retained earnings at beginning of year 104 Profit for year 51 755 Non-current liabilities Borrowings (10% loan notes repayable 2014) 300 Current liabilities Trade payables 88 Other payables 20 Taxation 22 Borrowings (bank overdraft) 105 235 Total equity and liabilities 1,290 The following information is available:

1 D epreciation has not been charged on office equipment with a carrying amount of £100,000.

This class of assets is depreciated at 12 per cent a year using the reducing-balance method.

2 A new machine was purchased, on credit, for £30,000 and delivered on 29 September 2011 but has not been included in the financial statements. (Ignore depreciation.)

3 A sales invoice to the value of £18,000 for September 2011 has been omitted from the financial statements. (The cost of sales figure is stated correctly.)

4 A dividend of £25,000 had been approved by the shareholders before 30 September 2011, but was unpaid at that date. This is not reflected in the financial statements.

5 The interest payable on the loan notes for the second half-year was not paid until 1 October 2011 and has not been included in the financial statements.

6 An allowance for trade receivables is to be made at the level of 2 per cent of trade receivables.

7 An invoice for electricity to the value of £2,000 for the quarter ended 30 September 2011 arrived on 4 October and has not been included in the financial statements.

8 The charge for taxation will have to be amended to take account of the above information.

Make the simplifying assumption that tax is payable shortly after the end of the year, at the rate of 30 per cent of the profit before tax.

CHAPTER 4 Acc ounti ng for 168 limit ed companies (1)

Required:

Prepare a revised set of financial statements for the year ended 30 September 2011 incorporating the additional information in 1 to 8 above. (Work to the nearest £1,000.)

AppendixLO1