Question
McKie Ltd has presented you with the following balances for the year ended September 30, 2023: $ $ Creditors 22,500 Sales Revenue 1,143,700 Land at
McKie Ltd has presented you with the following balances for the year ended September 30, 2023:
$ | $ | ||
Creditors | 22,500 | ||
Sales Revenue | 1,143,700 | ||
Land at cost | 550,000 | ||
Building at cost | 570,000 | ||
Furniture and fittings at cost | 85,000 | ||
Bank | 14,000 | ||
Provision for Depreciation | |||
Buildings | 120,000 | ||
Furniture and fittings | 15,000 | ||
Discounts | 5,700 | 5,800 | |
Retained Earnings at 1 Oct 2022 | 14,800 | ||
Provision for bad debts | 2,200 | ||
Goodwill | 400,000 | ||
Cash | 16,400 | ||
Inventory at 1 Oct 2022 | 48,000 | ||
Rent Received(from Breezy Ltd) | 27,000 | ||
Rent | 7,900 | ||
Wages and Salaries | 122,000 | ||
Insurance | 16,300 | ||
Carriage Inwards | 2,300 | ||
Returns | 8,500 | 12,000 | |
Commission received | 5,200 | ||
8% Mortgage | 100,000 | ||
Other Operating Expenses | 2,500 | ||
Debtors | 45,000 | ||
Purchases | 340,000 | ||
Debenture Interest | 1,200 | ||
Mortgage Interest | 4,600 | ||
Bad debt | 4,700 | ||
7% Debentures | 150,000 | ||
4% Preference Shares @ $0.5 | 130,000 | ||
Ordinary Shares @ $0.75 | 375,000 | ||
General Reserves | 127,000 | ||
Interim ordinary dividends paid | 4,500 | ||
2,249,400 | 2,249,400 |
The following additional information is available:
1. At September 30, 2023 closing inventory was $32,000
2. The Accountant has determined that the estimate for the provision for bad debts at September 30, 2023 is 10% of debtors.
3. At the end of the period it was discovered that one employee was owed $2,000 in salaries while another was overpaid by $4,000. Additionally insurance prepaid was $300
4. The following appropriation of the expenses must be made
Admin Selling & Dist
Rent 80% 20%
Wages & Salaries 60% 40%
Insurance 50% 50%
Prov. for Depreciation 70% 30%
5. On June 1, 2023 the company rented some of its office space to Breezy Ltd. At that date Breezy Ltd paid rent covering the next nine months.
6. Depreciation should be provided as follows:
Land Nil
Buildings 2 percent per year on cost
Furniture & Fittings 20 percent per year on reducing balance
7. Goodwill impairment was estimated to be 20%.
8. Corporation tax is estimated to be $42,000
9. The directors proposed on September 20, 2023 to pay the final preference dividends.
At a board of directors meeting on October 19, 2023 the directors evaluated the performance of the business over the past financial year and proposed to pay a further 6% ordinary dividend.
Required:
- Prepare the following for McKie Ltd for the financial year ending September 30, 2023:
- Statement of Profit or Loss (20 marks)
- Statement of changes in equity (8 marks)
Statement of Financial Position. (12 marks
Step by Step Solution
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Step: 1
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