CLIFTON PHARMA LIMITED

The following trial balance relates to Clifton Pharma Limited for the financial year ended 30 September 2018, assume you are

working as an Accounts Executive in this Company

	Dr.	Cr.
Cost of sales	134,000
Operating Expenses	35,000
Loan interest paid (see note 1)	1,500
Rental of vehicles (see note 2)	7,000
Revenue		338,300
Investment income		2,000
Leasehold property at cost (see note 4)	250,000
Plant and machinery at cost	197,000
Accumulated depreciation at 1 October 2017:
Leashold property		40,000
Plant and equipment		47,000
Investments	94,000
Share capital		280,000
Share premium		20,000
Retained earnings at 1 October 2017		19,300
Loan notes (see note 1)		50,000
Deferred tax balance at 1 October 2017 (see note 5)		20,000
Inventory at 30 September 2018	23,700
Trade receivables	76,400
Trade payables		14,100
Bank	12,100
	830,700	830,700

The following information is relevant for the preparation of financial statements for the year ended 30 September 2018:

1)The effective interest rate on the loan notes is 6% per year.

2 A recent review by the finance department of lease contract has reached the conclusion that 7,000 was paid: the lease agreement is for a four-year period in total, and there will be three more annual payments in advance of 7,000, payable on 1 October in each year. The vehicles in the lease agreement had a fair value of 24,000 at 1 October 2017 and they should be depreciated using the straight line method to a nil residual value. The interest rate implicit in the lease is 10% per year.

3 Other plant and equipment is depreciated at 20% per year by the reducing balance method.All depreciation of property, plant and equipment should be charged to cost of sales.

4 The leashold property has a 25 - year life and is amortised at a straight-line rate. On 30 September 2018 the leasehold property was revlaued to 220,000 and the directors wish to incorporate this revaluation in the financial statements.

5 The provision for income tax for the year ended 30 September 2018 has been estimated at 18,000. At 30 September 2018 there are taxable temporary differences of 92,000. The rate of income tax on profits is 25%

Required

a Prepare Adjustment Journals for the period ended 30 Septemebr 2018

b Prepare Adjusted Trial Balance as on 30 September 2018

c Prepare a statement of Profit or Loss for the year ended 30 September 2018 .

d Balance Sheet as at 30 September 2018