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QUESTION 1 The trial balance of Beta Limited as at 31 December, 2019 is as follows: Debit Credit GH GH Sales and Purchases 20,000 50,000
QUESTION 1 The trial balance of Beta Limited as at 31" December, 2019 is as follows: Debit Credit GH GH Sales and Purchases 20,000 50,000 Inventory 8,000 Distribution costs 8,000 Administration expenses 15,550 Trade Receivables and Payables 12,400 20,000 Cash and bank 8,100 Ordinary shares (GH0.50) 52,000 Revaluation reserve 8,000 10% Redeemable preference shares (GH1) 9,000 10% Loan Notes 8,000 Property. Plant and Equipment 75,000 Investment property 10,000 Rental income from investment property 1,000 Retained profits at 1st January, 2019 3,000 Loan note interest 400 Preference dividend 450 Interim ordinary dividend 1,600 Corporate Tax 500 Suspense 8,000 159,500 159,500 The following is to be taken into account: 1. The inventory at cost on 31st December, 2019 was GHC14,500 and the net realizable value was GHC12,000 2. The Property, Plant and Equipment include a building whose net book value is currently GH5,000 is to be revalued to GH9,000. 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 GH3,000. 4. The directors have decided to make an allowance for doubtful debts of 2% of trade receivables. This amount should be charged to administrative expense. 5. Depreciation charges for the year ended 31" December 2019 amounted to GH800. This figure should be included in the administrative expense. 6. The investment property was acquired in January, 2019. The rental income from the investment property GH1,000 relates to the two-year period ending 31" December, 2020. The company adopts fair value model in subsequent measurement of the investment property and fair value assessment at 31 December, 2019 puts the valuation at GH15,000. 7. The suspense account represents the corresponding credit for cash received for a fully subscribed issue of ordinary shares made on 30th December, 2019. The terms of the share issue was 4,000 new ordinary shares were issued at GH2.00 each. Required: In compliance with the Companies' Code provisions and in conformity with relevant International Financial Reporting Standards, prepare for publication; (0) The statement of profit or loss and other comprehensive income for the year ended 31" December, 2019. [7 marks) The statement of changes in equity for the year ended 31st December, 2019. [3 marks] (iii) The statement of financial position as at 31 December, 2019. (5 marks QUESTION 2 The following are the Statements of Financial Position of Yomi Limited for the years ended December 31, 2015 and 2016. 2016 2015 Assets GHC GHC GHC GHC Land 560,000 300,000 Building and Equipment 2,000,000 1.900.000 2,560,000 2,200,000 Accumulated Depreciation (800.000) (770,000 1,760,000 1,430,000 Long-Term Investments 50,000 25,000 Current Assets Inventory Accounts Receivable Cash Prepaid 300,000 410,000 30,000 20,000 320,000 460,000 50,000 15.000 760,000 845,000 2.570,000 2.300.000 Equities and Liabilities Ordinary shares (GHC2 par value) Share premium Retained Earnings Bonds Long-Term Note Payable 200,000 710,000 670,000 500,000 150,000 160,000 550.000 620,000 800,000 0 Current Liabilities Accountable Payable Accrued Liabilities 300,000 40.000 2.570,000 120,000 50.000 2.300.000 Additional information about 2016 transactions and events: i) Net profit for the year was GHC110,000 ii) Depreciation expense on buildings and equipment was GHC60,000 iii) Sold equipment with a cost of GHC50,000 and accumulated depreciation of GHC30,000 for cash of GHC17,000 iv) Declared and paid cash dividends of GHC60,000 v) Issued a GHC150,000 long-term note payable for buildings equipment vi) Purchased long-term investments for GHC25,000 vii) Paid GHC300,000 on the bonds payable viii) Issued 20,000 shares of GHC2 par value ordinary shares for GHC200,000. ix) Purchased land for GHC260,000. Required: Prepare the company's statement of cash flows for the year ended 31 December 2016, using the indirect method, adopting the format in IAS 7 Statement of cash flows. [15 marks]
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