Question 1

The following information has been extracted from the books of Gowling plc for the year ended 31 December 2019.

Insurance	44,000
Provision for Doubtful Debts 01/01/19		2,500
Rent and Rates	96,000
Selling & Distribution expenses	100,900
10% Debentures repayable 2027		120,000
Ordinary share capital 1 each		2,800,000
Buildings - at cost	2,500,000
Plant & Equipment - at cost	160,000
Motor Vehicles at cost	100,000
Accumulated depreciation at 01/01/19:
Buildings		60,000
Plant & Equipment		50,000
Motor Vehicles		40,000
Final dividend paid for 2017/18	123,200
Interim dividend on Ordinary shares	33,600
Trade Payables		57,000
Inventories at 01/01/19	82,000
Trade Receivables	196,000
Retained Earnings at 01/01/19		42,000
Bad debts written off	4,000
Wages & Salaries	88,000
Purchases	713,200
Administration Expenses	70,500
Discounts allowed	9,500
Turnover		1,406,000
Debenture Interest paid	8,000
Bank	248,600
Total	4,577,500	4,577,500

Additional information:

• Closing inventories at 31 December 2019 amounted to 82,000.
• Sales Commissions payable of 24,000 were outstanding at 31 December 2019.
• Rent of 3,000 had been paid in advance at 31 December 2019.
• Provision for doubtful debts is to be made at 5% of Trade Receivables.
• Depreciation on Non-current assets is to be provided as follows:

• Buildings 4% on cost.
• Equipment 10% on cost.
• Motor vehicles 25% on the net book value.

• Corporation tax is estimated to be 20,000.
• Interest outstanding on the debenture is to be provided for.
• A final dividend of 6% has been proposed by the directors.

Question 1 continued overleaf .

Question 1 continued .

Required:

Using the information provided above, prepare the Income Statement for the year ended 31 December 2019, and a Statement of Financial Position as at that date for Gowling plc.

The financial statements should be prepared in compliance with the requirements of IAS 1 Presentation of Financial Statements in so far as the information permits and should include the relevant notes.

(Total 25 marks)