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NEW Ltd commenced operations on 1 July, 2019 by issuing 100 000 $1.00 shares, payable in full on application. There were no share issue costs.
NEW Ltd commenced operations on 1 July, 2019 by issuing 100 000 $1.00 shares, payable in full on application. There were no share issue costs. For the year ending 30 June 2022, the company recorded the following aggregate transactions: Accounts $'000 Sales of goods 2 100 Gain from trading securities 40 Cost of sales 1 050 Administration charges 80 Selling and distribution expenses 50 Employee entitlement expenses (selling) 10 Employee entitlement expenses (administrative) 20 Wages and salaries (selling) 150 Wages and salaries (administrative) 200 Doubtful debts expense 10 Depreciation expense - warehouses and equipment To be calculated (selling) Depreciation expense - buildings (administrative) To be calculated Finance expense 30 Other borrowing expense 20 Income tax expense 65 The following additional information was noted during the preparation of financial statements for the year ended 30 June 2022: Inventory was measured at the lower of cost and net realisable value. Trading securities are equity investments that are held for the purpose of selling and short-term profit taking Buildings, warehouses and equipment were measured at cost. The benefits were expected to be received evenly over the useful life of the asset. The residual values are negligible. Asset Cost ($) Useful life (years) Buildings 1 200 000 20 (acquired on 1 July 2019) Warehouses and equipment 1 500 000 (acquired on 1 July 2020) 10 Land was revalued upward by $80 000 to $500 000 (assume zero income tax for this transaction). There had been no previously recognised reserve for revaluation surplus. The valuation was conducted by the registered valuer, The Invaluable Pty Ltd. $150 000 of bank loans are repayable within 1 year. The remaining amount is payable in full at the end of 2035. The loans are secured over the land. $50 000 of other loans are repayable within 1 year. The remaining amount is payable in full at the end of 2025. The provision for employee benefits includes $100 000 payable within 1 year. The warranty provision is in respect of a 24-month warranty given on certain goods sold. 20% of the warranty is to be claimed within 1 year. Summarised account balances are provided below: Year-end balances, 30 June 2022 $'000 Cash on hand 100 Cash on deposit at call 80 Trade debtors 300 Allowance for doubtful debts 50 Other debtors 200 Raw materials 100 Work in progress 300 Finished goods 500 Trading securities 100 Land* 500 Buildings 1 200 Accumulated depreciation - buildings To be calculated Warehouses and equipment 1 500 Accumulated depreciation - warehouses and equipment To be calculated Bank loans 2500 Other loans 300 Trade creditors 500 Provision for employee benefits 250 Warranty provision 100 Current tax payable 50 Deferred tax liability 20 *NOTE: $500 000 is the revalued amount of Land, i.e.. the $80,000 revaluati increase is already reflected in the balance of Land. Summarised account balances for the equity section at the end of the prior financial year (i.e., 2021) are provided below: Year-end balances, 30 June 2021 $'000 Share Capital, 30 June 2021* 100 Retained earnings, 30 June 2021 115 * NOTE: 100 000 shares @ $1.00. ** NOTE: No revaluation surplus and no general reserve had been recognised during the 2021 financial year. Additional shares were issued and fully paid on the following dates during the 2022 financial year: 1 Jan 2022: 40 000 ordinary shares issued/fully paid @ $1.00 1 May 2022: 60 000 ordinary shares issued fully paid @ $1.00 A cash dividend of $10 000 (5 cents per share) was declared and paid during the 2022 financial year. NEW Ltd transferred $5 000 out of retained earnings into general reserve. Required: For the year ending 30 June 2022 (NOTE: comparative financial statements are not required) 1. Using the pro forma table supplied in Appendix B, prepare a preliminary trial balance for NEW Ltd; (3 Marks) 2. Prepare a statement of comprehensive income for NEW Ltd in accordance with the requirements of AASB 101. NEW Ltd uses the single statement format for the statement of profit or loss and other comprehensive income and classifies expenses by function within the statement; (3 marks) 3. Prepare a statement of changes in equity for NEW Ltd in accordance with the requirements of AASB 101: (2 marks) (Hint: you need to calculate the closing balances of equity items, using the opening balances and other information provided above.) 4. Prepare a statement of financial position for NEW Ltd in accordance with AASB 101. Use the currenton-current presentation format; (3 marks) 5. Prepare appropriate notes to the accounts. (You are not required to prepare notes related to income taxes. Include the following note as note 1. You may optionally add accounting policies to this note.) (5 marks) "1. Summary of significant accounting policies Basis of accounting The financial report is a general purpose financial report which has been prepared on the historical cost basis, except where stated otherwise. APPENDIX B NEW Ltd - Trial Balance as at 30 June 2022 DR CR $'000 $'000 Sales of goods Gain from trading securities Cost of sales Administration charges Selling and distribution expenses Employee entitlement expenses (selling) Employee entitlement expenses (administrative) Wages and salaries (selling) Wages and salaries (administrative) Doubtful debts expense Depreciation expense - buildings (administrative) Depreciation expense - warehouses and equipment (selling) Finance expense Other borrowing expense Income tax expense Cash on hand Cash on deposit at call Trade debtors Allowance for doubtful debts Other debtors Raw materials Work in progress Finished goods Trading securities Land Buildings Accumulated depreciation - buildings Warehouses and equipment Accumulated depreciation - warehouses and equipment Bank loans Other loans Trade creditors Provision for employee benefits Warranty provision Current tax payable Deferred tax liability Share Capital Dividends paid Retained earnings, transfer to general reserve General reserve Land revaluation surplus Retained earnings, 30 June 2021 Totals NEW Ltd commenced operations on 1 July, 2019 by issuing 100 000 $1.00 shares, payable in full on application. There were no share issue costs. For the year ending 30 June 2022, the company recorded the following aggregate transactions: Accounts $'000 Sales of goods 2 100 Gain from trading securities 40 Cost of sales 1 050 Administration charges 80 Selling and distribution expenses 50 Employee entitlement expenses (selling) 10 Employee entitlement expenses (administrative) 20 Wages and salaries (selling) 150 Wages and salaries (administrative) 200 Doubtful debts expense 10 Depreciation expense - warehouses and equipment To be calculated (selling) Depreciation expense - buildings (administrative) To be calculated Finance expense 30 Other borrowing expense 20 Income tax expense 65 The following additional information was noted during the preparation of financial statements for the year ended 30 June 2022: Inventory was measured at the lower of cost and net realisable value. Trading securities are equity investments that are held for the purpose of selling and short-term profit taking Buildings, warehouses and equipment were measured at cost. The benefits were expected to be received evenly over the useful life of the asset. The residual values are negligible. Asset Cost ($) Useful life (years) Buildings 1 200 000 20 (acquired on 1 July 2019) Warehouses and equipment 1 500 000 (acquired on 1 July 2020) 10 Land was revalued upward by $80 000 to $500 000 (assume zero income tax for this transaction). There had been no previously recognised reserve for revaluation surplus. The valuation was conducted by the registered valuer, The Invaluable Pty Ltd. $150 000 of bank loans are repayable within 1 year. The remaining amount is payable in full at the end of 2035. The loans are secured over the land. $50 000 of other loans are repayable within 1 year. The remaining amount is payable in full at the end of 2025. The provision for employee benefits includes $100 000 payable within 1 year. The warranty provision is in respect of a 24-month warranty given on certain goods sold. 20% of the warranty is to be claimed within 1 year. Summarised account balances are provided below: Year-end balances, 30 June 2022 $'000 Cash on hand 100 Cash on deposit at call 80 Trade debtors 300 Allowance for doubtful debts 50 Other debtors 200 Raw materials 100 Work in progress 300 Finished goods 500 Trading securities 100 Land* 500 Buildings 1 200 Accumulated depreciation - buildings To be calculated Warehouses and equipment 1 500 Accumulated depreciation - warehouses and equipment To be calculated Bank loans 2500 Other loans 300 Trade creditors 500 Provision for employee benefits 250 Warranty provision 100 Current tax payable 50 Deferred tax liability 20 *NOTE: $500 000 is the revalued amount of Land, i.e.. the $80,000 revaluati increase is already reflected in the balance of Land. Summarised account balances for the equity section at the end of the prior financial year (i.e., 2021) are provided below: Year-end balances, 30 June 2021 $'000 Share Capital, 30 June 2021* 100 Retained earnings, 30 June 2021 115 * NOTE: 100 000 shares @ $1.00. ** NOTE: No revaluation surplus and no general reserve had been recognised during the 2021 financial year. Additional shares were issued and fully paid on the following dates during the 2022 financial year: 1 Jan 2022: 40 000 ordinary shares issued/fully paid @ $1.00 1 May 2022: 60 000 ordinary shares issued fully paid @ $1.00 A cash dividend of $10 000 (5 cents per share) was declared and paid during the 2022 financial year. NEW Ltd transferred $5 000 out of retained earnings into general reserve. Required: For the year ending 30 June 2022 (NOTE: comparative financial statements are not required) 1. Using the pro forma table supplied in Appendix B, prepare a preliminary trial balance for NEW Ltd; (3 Marks) 2. Prepare a statement of comprehensive income for NEW Ltd in accordance with the requirements of AASB 101. NEW Ltd uses the single statement format for the statement of profit or loss and other comprehensive income and classifies expenses by function within the statement; (3 marks) 3. Prepare a statement of changes in equity for NEW Ltd in accordance with the requirements of AASB 101: (2 marks) (Hint: you need to calculate the closing balances of equity items, using the opening balances and other information provided above.) 4. Prepare a statement of financial position for NEW Ltd in accordance with AASB 101. Use the currenton-current presentation format; (3 marks) 5. Prepare appropriate notes to the accounts. (You are not required to prepare notes related to income taxes. Include the following note as note 1. You may optionally add accounting policies to this note.) (5 marks) "1. Summary of significant accounting policies Basis of accounting The financial report is a general purpose financial report which has been prepared on the historical cost basis, except where stated otherwise. APPENDIX B NEW Ltd - Trial Balance as at 30 June 2022 DR CR $'000 $'000 Sales of goods Gain from trading securities Cost of sales Administration charges Selling and distribution expenses Employee entitlement expenses (selling) Employee entitlement expenses (administrative) Wages and salaries (selling) Wages and salaries (administrative) Doubtful debts expense Depreciation expense - buildings (administrative) Depreciation expense - warehouses and equipment (selling) Finance expense Other borrowing expense Income tax expense Cash on hand Cash on deposit at call Trade debtors Allowance for doubtful debts Other debtors Raw materials Work in progress Finished goods Trading securities Land Buildings Accumulated depreciation - buildings Warehouses and equipment Accumulated depreciation - warehouses and equipment Bank loans Other loans Trade creditors Provision for employee benefits Warranty provision Current tax payable Deferred tax liability Share Capital Dividends paid Retained earnings, transfer to general reserve General reserve Land revaluation surplus Retained earnings, 30 June 2021 Totals
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