Presented below is a draft set of simplified financial statements for Pear Limited for the year ended 30 September 2010.

The following information is available:
1 Depreciation 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 2010 but has not been included in the financial statements. (Ignore depreciation.)
3 A sales invoice to the value of £18,000 for September 2010 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 2010, 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 2010 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 2010 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.

Required: 

Prepare a revised set of financial statements for the year ended 30 September 2010 incorporating the additional information in 1 to 8 above. (Work to the nearest £1,000.)

Transcribed Image Text:

Income statement for the year ended 30 September 2010 £000 Revenue 1,456 Cost of sales (768) 688 Gross profit Salaries (220) (249) |(131) Depreciation Other operating costs Operating profit Interest payable 88 (15) Profit before taxation 73 Taxation at 30% (22) Profit for the year 51 Statement of financial position as at 30 September 2010 £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 Share premium account Retained earnings at beginning of year Profit for year 300 300 104 51 755 Non-current liabilities Borrowings (10% loan notes repayable 2014) 300 Current liabilities Trade payables Other payables 88 20 Taxation 22 Borrowings (bank overdraft) 105 235 Total equity and liabilities 1,290