The accountant of Scampion plc, a retailing company listed on the London Stock Exchange, has produced the following draft financial statements for the company for the year to 31 May 2012.

Income Statement for year ending 31 May 2012

\begin{tabular}{lrr}

\hline & $£ 000$ & $£ 000$ \\

Revenue & 3,489 \\

Income from investments & $\frac{15}{3,504}$ \\

Purchases of goods and services & 1,929 & \\

Value added tax paid on sales & 257 \\

Wages and salaries including pension scheme & 330 \\

Depreciation & 51 \\

Interest on loans & 18 \\

General administration expenses & 595 \\

- Shops & -25 \\

- Head office & & \\

Net profit for year & $\underline{3,205}$ \\

Corporation tax at 40\% & $\underline{1299}$ \\

Profit after tax for year & $\underline{179}$

\end{tabular}

\begin{tabular}{|c|c|c|c|}
\hline & & $£ 000$ & $£ 000$ \\
\hline \multicolumn{3}{|l|}{ Non-current assets } & \\
\hline \multicolumn{3}{|l|}{ Land and buildings } & \begin{tabular}{r}
$1,1 / 8$ \\
194 \end{tabular} \\
\hline \multicolumn{3}{|l|}{\begin{tabular}{l}
Fixtures, fittings, equipment and motor vehicles \\
Investments \end{tabular}} & 167 \\
\hline & $\overline{1,539}$ \\
\hline \multicolumn{4}{|l|}{ Current assets } \\
\hline \multicolumn{2}{|l|}{ Inventory } & 230 & \\
\hline \multirow{2}{*}{\multicolumn{2}{|c|}{\begin{tabular}{l}
Accounts receivable \\
Cash at bank and in hand \end{tabular}}} & 67 & \\
\hline & & $\frac{84}{381}$ & \\
\hline \multicolumn{4}{|l|}{ Current liabilities } \\
\hline \multicolumn{2}{|l|}{ Accounts payable } & $\underline{487}$ & $\underline{(106)}$ \\
\hline \multicolumn{3}{|l|}{ Ordinary share capital ( $£ 1$ shares) } & 660 \\
\hline & & & 703 \\
\hline \multicolumn{2}{|l|}{ Loans } & & $\frac{70}{1,433}$ \\
\hline \multicolumn{4}{|l|}{ You discover the following further information: } \\
\hline \multicolumn{4}{|l|}{ (i) Non-current assets details are as follows: } \\
\hline & \begin{tabular}{l}
Cost \\
£OOO \end{tabular} & \begin{tabular}{l}
Depreciation \\
£OOO \end{tabular} & \begin{tabular}{l}
Net \\
$£ O O O$
\end{tabular} \\
\hline Freehold land and buildings & 1,212 & 34 & 1,178 \\
\hline Fixtures, fittings and equipment & 181 & 56 & 125 \\
\hline Motor vehicles & 137 & 68 & 69 \\
\hline \end{tabular}
Purchases of non-current assets during the year were freehold land and buildings $£ 50,000$; fixtures, fittings and equipment $£ 40,000$; motor vehicles $£ 20,000$. The only non-current asset disposal during the year is referred to in note $(x)$. Depreciation charged during the year was $£ 5,000$ for freehold buildings; $£ 18,000$ for fixtures, fittings and equipment; and $£ 28,000$ for motor vehicles. Straight line depreciation method is used assuming the following lives: Freehold buildings 40 years, fixtures, fittings and equipment 10 years and motor vehicles five years.
(ii) A dividend of 10 p per share is proposed.
(iii) A valuation by Bloggs \& Co Surveyors shows the freehold land and buildings to have a market value of $£ 1,350,000$.
(iv) Loans are:
$£ 20,000$ bank loan with a variable rate of interest repayable by 30 September 2012;
$£ 50,00012 \%$ loan notes repayable 2016;
$£ 100,00011 \%$ loan notes repaid during the year.
There were no other loans during the year.
(v) The income from investments is derived from non-current asset investments (shares in related companies) $£ 5,000$ and current asset investment (government securities) $£ 10,000$.
(vi) At the date of the statement of financial position the shares in related companies (cost $£ 64,000$ ) are valued by the directors at $£ 60,000$. The market value of the government securities is $£ 115,000$ (cost $£ 103,000$ ).
(vii) After the date of the statement of financial position but before the financial statements are finalised there is a very substantial fall in share and security prices. The market value of the government securities had fallen to $£ 50,000$ by the time the directors signed the accounts. No adjustment has been made for this item in the accounts.
(viii) Within two weeks of the date of the statement of financial position a notice of liquidation was received by Scampion plc concerning one of the company's debtors. $£ 45,000$ is included

in the statement of financial position for this debtor and enquiries reveal that nothing is likely to be paid to any unsecured creditor. No adjustment has been made for this item in the accounts.
(ix) The corporation tax charge is based on the accounts for the year and there are no other amounts of tax owing by the company.
(x) Reserves at 31 May 2011 were:
\begin{tabular}{lc}
& $\mathbf{£}$ \\
Revaluation reserve & 150,000 \\
Share premium account & 225,000 \\
Retained profits & 149,000 \end{tabular}
The revaluation reserve represents the after-tax surplus on a property which was valued in last year's statement of financial position at $£ 400,000$ and sold during the current year at book value.
\section*{Required: $\square$}
An income statement for the year ending 31 May 2012 and a statement of financial position at that date for Scampion plc complying with the Companies Acts in so far as the information given will allow.
Ignore advance corporation tax.
\section*{(Association of Chartered Certified Accountants)}