1) PREPARE THE INCOME STATEMENT FOR THE YEAR ENDED 31st MARCH 2022, WITH EXPENSES CLASSIFIED BY FUNCTION (25 MARKS)
The following trial balance has been provided from the financial records of Bluey Energy Solutions Ltd for the year ended 31st March 2022. Cr m Dr m 43 61 25 10 175 28 20 21 19 Administrative expenses Distribution expenses Insurance Rent and rates Non-current assets (Cost) Property, plant and equipment Accumulated Depreciation (at 01/04/2021) Property, plant and equipment Gas and Electricity Interim ordinary dividend paid Inventories (01/04/2021) Allowance for doubtful debts (at 01/04/2021) Revenue Retained earnings Ordinary Share Capital (10p) (at 01/04/2021) Share Premium General reserve Trade payables Trade receivables Bank 5% Debentures (2024). Purchases Debenture interest paid 3 230 28 20 18 8 16 42 15 200 145 5 566 566 Additional Information The following information was provided at the end of the year: 1. Inventory at 31st March 2022 was valued at 21 million. 2. Insurance costs paid in advance for the year ended at 30th September 2022 were 10 million. Insurance costs are to be allocated to cost of sales (20%), administrative expenses (40%) and distribution expenses (40%). 3. Gas and electricity costs for part of the year remain unpaid. The estimated gas and electricity costs for the 6 months to 31st May 2022 are 3m. Gas and electricity costs are allocated equally to cost of sales and administrative expenses. 4. Other costs are allocated as follows: Cost of sales Administrative Distribution expenses expenses Rent and rates 30% 30% 40% Depreciation 20% 10% 70% continued... 5. The company depreciates property, plant and equipment at 25% on a reducing balance basis. Of the balance relating to cost of property, plant and equipment 27 million related to land. 6. A bad debt of 2m has not been accounted for in the trial balance above. 7. The allowance for doubtful debts is to be maintained at 5% of outstanding trade receivables at the trial balance date. 8. The company completed a rights issue and issued 3 shares for every 4 held at a price of 70p per share. All shares were paid for and no entries have been made to account for this share issue. 9. The directors of the company propose to: a. Account for corporation tax of 7 million for the year. b. Account for the outstanding debenture interest unpaid. c. Pay a final ordinary dividend of 4p per share on all shares that were issued and paid up at the statement of financial position date. d. Transfer 5 million from the general reserve. The following trial balance has been provided from the financial records of Bluey Energy Solutions Ltd for the year ended 31st March 2022. Cr m Dr m 43 61 25 10 175 28 20 21 19 Administrative expenses Distribution expenses Insurance Rent and rates Non-current assets (Cost) Property, plant and equipment Accumulated Depreciation (at 01/04/2021) Property, plant and equipment Gas and Electricity Interim ordinary dividend paid Inventories (01/04/2021) Allowance for doubtful debts (at 01/04/2021) Revenue Retained earnings Ordinary Share Capital (10p) (at 01/04/2021) Share Premium General reserve Trade payables Trade receivables Bank 5% Debentures (2024). Purchases Debenture interest paid 3 230 28 20 18 8 16 42 15 200 145 5 566 566 Additional Information The following information was provided at the end of the year: 1. Inventory at 31st March 2022 was valued at 21 million. 2. Insurance costs paid in advance for the year ended at 30th September 2022 were 10 million. Insurance costs are to be allocated to cost of sales (20%), administrative expenses (40%) and distribution expenses (40%). 3. Gas and electricity costs for part of the year remain unpaid. The estimated gas and electricity costs for the 6 months to 31st May 2022 are 3m. Gas and electricity costs are allocated equally to cost of sales and administrative expenses. 4. Other costs are allocated as follows: Cost of sales Administrative Distribution expenses expenses Rent and rates 30% 30% 40% Depreciation 20% 10% 70% continued... 5. The company depreciates property, plant and equipment at 25% on a reducing balance basis. Of the balance relating to cost of property, plant and equipment 27 million related to land. 6. A bad debt of 2m has not been accounted for in the trial balance above. 7. The allowance for doubtful debts is to be maintained at 5% of outstanding trade receivables at the trial balance date. 8. The company completed a rights issue and issued 3 shares for every 4 held at a price of 70p per share. All shares were paid for and no entries have been made to account for this share issue. 9. The directors of the company propose to: a. Account for corporation tax of 7 million for the year. b. Account for the outstanding debenture interest unpaid. c. Pay a final ordinary dividend of 4p per share on all shares that were issued and paid up at the statement of financial position date. d. Transfer 5 million from the general reserve
