Question 2

Table Plc is currently preparing financial statements for the year ended 31 March 2019.

The accounting team discover that the sales figure for 31 March 2018 was understated by 200,000. The Trade Receivables at 31 March 2018 was also understated by the same amount.

This error is regarded as material.

Table Plcs draft Profit or Loss Comprehensive Income Statement for the year to 31 March 2019, before correction of the error, is as follows:

2018 2019

000 000

Revenue 1,660 1,740

Cost of Sales (670) (730)

Gross Profit 990 1,010

Expenses (590) (560)

Profit before taxation 400 450

Income tax expense (80) (90)

Profit for the year 320 360

Retained earnings at 1 April 2017 were 950,000. No dividends were paid during the two years to 31 March 2019. It should be assumed that Table Plcs tax liability is always 20% of its profit before tax.

Requirement:

1. Prepare a Profit or Loss Statement of Comprehensive Income for the year ended 31 March 2019, including the restated comparative figures for the year ended 31 March 2018.

2. Calculate Table Plcs restated retained earnings at 31 March 2019, after correcting the above error.