) Caremuch Ltd provides nursing services in Lancashire. Trial balance for Caremuch Ltd as at 31 December 2013 Dr. Cr. Equity share capital 800,000 Debentures 6% (issued 1 January 2013) 100,000 Share premium 250,000 Land and buildings at cost 700,000 Office equipment at cost 400,000 Motor vehicles at cost 40,000 Accumulated depreciation for land and buildings at 1.01.13 60,000 Accumulated depreciation on office equipment at 1.01.13 120,000 Accumulated depreciation on motor vehicles at 1.01.13 10,000 Revenue 1,356,270 Purchases 987,190 Returns in 8,310 Returns out 4,170 Trade receivables 130,990 Trade payables 86,980 Bad debts 4,270 Provision for doubtful debts 6,210 Motor expenses 11,270 Rent 17,600 Insurance 2,400 Salaries 112,160 General administration expenses 154,260 Inventory 238,460 Bank 106,410 Dividend paid in year 50,000 Retained earnings 169,690 2,963,320 2,963,320 Please turn over 2 No adjustments have been made to the trial balance for the following information. i. At 31 December 2013, closing inventory was 320,150. ii. Rent is 1,600 per month payable one month in arrears. iii. Insurance for the year is paid annually on 1 October. iv. The provision for doubtful debts is to be increased to 7,000. v. Debenture interest is payable annually on 1 January and the amount due has to be provided for. vi. Depreciation has not been accounted for in the year. It is company policy to provide for depreciation on buildings at 2% of cost, for office equipment at the rate of 10% on cost and on motor vehicles at the rate of 25% on cost. Assets are assumed to have a residual value of zero. vii. Caremuch acquired a new vehicle for a nurse at a cost of 25,000 (cash) on 28 December 2013. It is company policy to provide a full years depreciation in the year of acquisition of an asset and none in the year of disposal. No adjustment has been made to the trial balance for the cost or depreciation of this vehicle. viii. In the trial balance above, land cost 350,000. On 31 December 2013, the directors arranged for an external revaluation of land to be carried out, and the fair value of the land was found to be 450,000. The directors wish the effects of this revaluation to be included in the final accounts. ix. During the year, the company issued 100,000 1 shares at a price of 1.50 each which was received in cash. No record of this issue appears in the figures above. A dividend of 10p per equity share is proposed at the year end. Required: (a) Prepare for Caremuch Ltd the statement of profit or loss for the year ended 31 December 2013 and a statement of financial position as at 31 December 2013 (ignore taxation) in a publishable format. Show all your workings. (18 marks) (b) Prepare a statement of changes in equity for Caremuch Ltd for the year ended 31 December 2013. Show all your workings. (6 marks) Please turn over 3 (c) Caremuch Ltd has employed a new book-keeper. As the companys accountant, you are asked to explain to the book-keeper about the following issues: (i) errors which may be present in the accounts but which do not cause the two sides of the trial balance to disagree and (ii) what a suspense account is and two reasons for using a suspense account. Write brief notes for the book-keeper about these two issues.