FINANCIAL ACCOUNTING (PDBA 237) TRIAL QUESTIONS ON FINANCIAL STATEMENT OF COMPANIES QUESTION ONE The following is an extract from the trial balance of CF at 31 March 2006: GH'000 GH'000 DR CR Administration expenses 260 Cost of sales 480 Interest paid 190 Interest bearing borrowings 2.200 Inventory at 31 March 2006 220 Property, plant and equipment at cost 1,500 Property, plant and equipment, depreciation to 31 March 2005 340 Distribution costs 200 Revenue 2,000 Notes: ) Included in the closing inventory at the reporting date was inventory at a cost of GH35,000, whose net realisable value was ascertained to be GH19,000. (ii) Depreciation is provided for on property, plant and equipment at 20% per year using the reducing balance method. Depreciation is regarded as cost of sales. (iii)A member of the public was seriously injured while using one of CE's products on 4 October 2005. Professional legal advice is that CE will probably have to pay GH500,000 compensation Required: Prepare CE's income statement for the year ended 31 March 2006 down to the line "profit before tax ". QUESTION TWO The trial balance of SHAKERS LTD as at 31 December 2009 is as follows: GHC GH Revenue and Purchases 20,000 50,000 Inventory 8,000 Distribution costs 8,000 Administration expenses 15,550 Receivables and Payables 10,000 20,000 Reorganization expenses 2,400 Cash and bank 8,100 Stated Capital (@GHe 1.00/share) 11,000 10% Irredeemable Preference Shares (@GH1.00/share) 9,000 10% Debentures 8,000 Non-current Assets at Net Book Value 35,000 Retained Earnings (@ 1 January 2009) 3,000 Debenture interest paid 400 Preference dividend paid Interim ordinary dividend paid 1.600 Tax 500 Suspense 8.000 109.500 109,500 The following is to be taken into account 1. A building whose Net Book Value is currently GH5,000 was revalued to GHe 11,000, 2. A final ordinary dividend of GH0.10 per share is to be provided for, in addition to the interim dividend paid. 3. The balance on the corporation tax account represents an overprovision of tax for the previous year. Tax for the current year is estimated at GH43,000. 4. Closing inventory is GHe 12,000. 5. The balance on the suspense account represents the proceeds from the issue of 4,000 ordinary shares @ GH42.00/share raised on the last day of the year. 450 Required: Prepare for Shakers Ltd a: a) Statement of comprehensive income for the year ended Dec 31 2009, b) Statement of changes in equity for the year ended Dec 31 2009, c) Statement of financial position as at Dec 31 2009. NB: Notes to the accounts are not required