QUESTION 2

The Omega Corporation, a limited liability company, is in the distribution trade. Its list of account balances at 30 June 2000 is as follows:

	$000	$000
Sales Revenue		28042
Cost of goods sold	12000
Distribution Costs	2560
Administrative expenses	3890
Debenture Interest	70
Return Inwards	100
Interim Dividends paid	840
Goodwill	500
Land at cost	1900
Building:
- Cost	8300
- Accumulated depreciation at 30 June 1999		1020
Office equipment:
- Cost	1800
- Accumulated depreciation at 30 June 1999		290
Delivery Van
- Cost	1680
- Accumulated depreciation at 30 June 1999		620
Debtors	810
Provision for bad debts		18
Cash and bank	800
Rent receivable		20
Creditors		820
10% Debenture		1000
Ordinary shares of $0.25 each		1200
General reserves		2470
Accumulated profits 30 June 1999	250
	35500	35500

(Please note that the trial balance figures are in thousands as indicated at the top of each column above $000)

The following additional information is available:

1. Debtors totaling $6000 are to be written off and the provision for bad debts increased to $30000. It is the companys practice to include the charge for bad debts in the administrative expenses in the income statement.

2. Accruals and prepayments:

Prepayments Accruals

Distribution costs $60000 $120000

Administrative expenses $70000 $190000

3. During the year the company rented some of its warehouse space to another organization for $3000 per month. In early July 2000 the company received rent for the months of May, June, and July 2000.

4. Depreciation should be provided as follows:

Land Nil

Buildings 2 percent per year on cost

Office equipment 20 percent per year on reducing balance

Delivery Van 25 percent per year on cost

50 % of the Building is used for administrative purposes while the remaining 50% is used for selling and distribution purposes. Office equipment is used in the same proportion as the building. The delivery van is used exclusively by the selling and distribution department.

5. Corporation tax is estimated to be $80000

6. The directors proposed on May 30, 2000 to pay a further 6% ordinary dividend.

7. Write off 20% of goodwill

8. The company has decided to transfer $100000 to general reserves.

Required:

(a) Prepare the following financial statements for the year ended June 30, 2000 in accordance with the provisions of IAS 1.

1. Income Statement (10marks)

1. Statement of Changes in Equity (5marks)

1. Balance Sheet (10 marks)