Question 1 (40 marks) Compulsory Roland Ltd is a storage company operating in the Munster region. The following trial balance has been extracted from the books of Roland Ltd as at 30 June 2020: Roland Ltd Trial Balance on 30 June 2020 Insurance 4,760 Rent 48,000 Advertising 13,900 Salaries and wages 148,300 Plant and equipment: At cost 425,000 Accumulated depreciation at 1/7/2019 46,200 Ordinary share capital (0.50 ordinary shares) 300,000 Bank 29,500 Cash 3,300 Trade receivables 139,800 Bad debts 9,340 Provision for doubtful debts at 1/7/2019 6,500 Long-term loan 80,000 Retained earnings at 1/7/2019 31,100 Inventory at 1/7/2019 56,500 Purchases and Sales 480,000 923,600 Vehicles At cost 98,000 Accumulated depreciation at 1/7/2019 41,000 Interest cost 5,200 Warehouse costs 84.600 Security costs 36,800 Trade payables 95,600 1,553,500 1,553 500 The following additional information is to be taken into consideration in the preparation of the required statements: 1. The closing inventory was valued at 35.400 2 Depreciation is to be provided on plant & equipment at a rate of 8 per cent of cost and vehicles at 15 per cent of the net book value. 3 Rent is 4,000 per month and the rent is paid in full on the 1 December each year, RI 99 AC4213 Exam Aute d * F3 F. FS Prtsen FB Home F6 27 79 $ A & 6 4. The long-term loan has an interest cost of 10 per cent per annum. 5. At the year end, the company sold a piece of equipment for 26,000 cash. The original cost of the equipment was 35,000 and the accumulated depreciation attaching to the equipment at the disposal date was 16,000. No entry has been made in the books of the company to reflect this sale. 6. The provision for doubtful debts is to be equal to 8 per cent of the trade receivables balance at 30 June 2020. 7. Insurance due at 30 June 2020 amounted to 1,250. 8. Tax owing at 30 June 2020 is estimated to be 24,000. 9. An ordinary dividend of 3c per share issued and fully paid) is approved. Round all figures to the nearest . Required (a) Prepare a statement of profit and loss and a statement of financial position for Roland Ltd for the year ending 30 June 2020. (32 marks) (b) 'Although the profit or loss account is a record of past achievement, the calculations required for certain expenses involve estimates for the future. What does this statement mean? Can you think of examples where estimates of the future are used? (8 marks) Total 40 marks Question 1 (40 marks) Compulsory Roland Ltd is a storage company operating in the Munster region. The following trial balance has been extracted from the books of Roland Ltd as at 30 June 2020: Roland Ltd Trial Balance on 30 June 2020 Insurance 4,760 Rent 48,000 Advertising 13,900 Salaries and wages 148,300 Plant and equipment: At cost 425,000 Accumulated depreciation at 1/7/2019 46,200 Ordinary share capital (0.50 ordinary shares) 300,000 Bank 29,500 Cash 3,300 Trade receivables 139,800 Bad debts 9,340 Provision for doubtful debts at 1/7/2019 6,500 Long-term loan 80,000 Retained earnings at 1/7/2019 31,100 Inventory at 1/7/2019 56,500 Purchases and Sales 480,000 923,600 Vehicles At cost 98,000 Accumulated depreciation at 1/7/2019 41,000 Interest cost 5,200 Warehouse costs 84.600 Security costs 36,800 Trade payables 95,600 1,553,500 1,553 500 The following additional information is to be taken into consideration in the preparation of the required statements: 1. The closing inventory was valued at 35.400 2 Depreciation is to be provided on plant & equipment at a rate of 8 per cent of cost and vehicles at 15 per cent of the net book value. 3 Rent is 4,000 per month and the rent is paid in full on the 1 December each year, RI 99 AC4213 Exam Aute d * F3 F. FS Prtsen FB Home F6 27 79 $ A & 6 4. The long-term loan has an interest cost of 10 per cent per annum. 5. At the year end, the company sold a piece of equipment for 26,000 cash. The original cost of the equipment was 35,000 and the accumulated depreciation attaching to the equipment at the disposal date was 16,000. No entry has been made in the books of the company to reflect this sale. 6. The provision for doubtful debts is to be equal to 8 per cent of the trade receivables balance at 30 June 2020. 7. Insurance due at 30 June 2020 amounted to 1,250. 8. Tax owing at 30 June 2020 is estimated to be 24,000. 9. An ordinary dividend of 3c per share issued and fully paid) is approved. Round all figures to the nearest . Required (a) Prepare a statement of profit and loss and a statement of financial position for Roland Ltd for the year ending 30 June 2020. (32 marks) (b) 'Although the profit or loss account is a record of past achievement, the calculations required for certain expenses involve estimates for the future. What does this statement mean? Can you think of examples where estimates of the future are used? (8 marks) Total 40 marks