Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have been provided with the following trial balance as at 31 December 2005 for a limited liability company called Sand Ltd. Debit Credit

 The following additional information is relevant: (1) Inventory at 31 December 2005 was valued at $800,000. (2) DepreciationRequired: Prepare the followings for Sand Ltd.: (a) a statement of profit or loss; and a statement of profit or loss and othe 

You have been provided with the following trial balance as at 31 December 2005 for a limited liability company called Sand Ltd. Debit Credit so0 so00 1,000,000 Ordinary shares of $I cach 1,000 Other reserve 700 Revaluation reserve, at I January 2005 500 General reserve, at 1 January 2005 100 Retained profit, at 1 January 2008 1,890 8% Debentures, repayable on 31 March 2008 1,000 Frechold land, at 1 January 2005 (at valuation) 6,450 Fixtures and fittings, at 1 January 2005 (cost S600,000) 480 Motor vehicles, at 1 January 2005 (cost $800,000) 600 Inventory 600 Trade receivable and payables 800 400 Allowances for doubtful debts, at 1 January 2005 40 Bank overdraft 200 Purchases and sales 6,725 12,090 Debenture interest (half-year paid) 40 Interim dividends on ordinary shares 200 Directors' remuneration 300 Rent and rates 600 Heating and lighting 340 Administrative salaries 400 Selling expenses 200 Discounts allowed and received 170 55 Bad Debts 70 17,975 17,975 The following additional information is relevant: (1) Inventory at 31 December 2005 was valued at $800,000. (2) Depreciation is to be provided as follows: (i) Fixtures and fittings at 20% per annum on the straight-line method, allocated to administrative expenses; (ii) Motor vehicles at 25% per annum on the straight-line method, allocated to distribution costs. (3) Rates include a prepayment of $12,000. (4) Allowances for doubtful debts are to be adjusted to $48,000 at the year end. Bad and doubtful debts are allocated to cost of sales. (5) There are administrative salaries outstanding of $10,000 for the year ended 31 December 2005. (6) The audit fee is estimated to be $20,000. (7) Income tax of $100,000 is to be provided for the year. (8) Discounts allowed and received are allocated to distribution costs and administrative expenses respectively. (9) Directors' remuneration is to be analysed amongst cost of sales, distribution costs and administrative expenses as follows: S000 - Cost of sales 100 - Distribution costs 60 - Administrative expenses 140 (10) Half-year interest on debentures has not yet been paid and recorded. (11) At 31 December 2005, land was revalued to $8,000,000. (12) At 31 December 2005, the board of directors declared to pay a final dividend on the ordinary sha 10 cents each and resolved to transfer $50,000 om retained profit to general reserve. The liability to pay a dividend is recognized when the dividend is declared. Sand Ltd is in the jurisdiction when declaration of the dividend dos not require further approval by the relevant authority. (13) There are no changes in share capital during the year. Required: Prepare the followings for Sand Ltd.: (a) a statement of profit or loss; and a statement of profit or loss and other comprehensive income for the year ended 31 December 20X5; (b) a statement of changes in equity for the year ended 31 December 20X5. Hints: () Sand Ltd. Statement of profit or loss for the year ended 31 December 20X5 $000 Revenue Cost of sales (W1) Gross profit 5,387 Distribution costs (W2) Administrative expenses (W3) Finance costs (W4) Profit before tax 3,114 Income tax expense Profit for the year F||

Step by Step Solution

3.40 Rating (150 Votes )

There are 3 Steps involved in it

Step: 1

Solution Statement of Profits and losses Revenue 12090 Cost of sales 6943 Gross Profit 5147 Distribution costs 630 Administrative expenses 1563 Financ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Tools for Business Decision Making

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine

6th Canadian edition

1118644948, 978-1118805084, 1118805089, 978-1118644942

More Books

Students also viewed these Accounting questions

Question

Question 1 (a2) What is the reaction force Dx in [N]?

Answered: 1 week ago