Question 5

The following information has been extracted from the books of Free Quote plc for the year to 31 March 2020.
	P000
Administrative expenses	170
Interest paid	5
Ordinary shares of P1 each	200
Dividend	6
Cash at bank and in hand	9
Income tax	10
Warranty provision	90
Distribution costs	240
Land and buildings:
at cost (Land P110 000, building P100 000)	210
accumulated depreciation (at 1 April 2019)	48
Plant and machinery:
at cost	125
accumulated depreciation (at 1 April 2019)	75
Retained earnings (at 1 April 2019)	270
10% Loan (issued in 2017)	80
Purchases	470
Sales	1,300
Inventory (at 1 April 2019)	150
Trade payables	60
Trade receivables	728

Additional information:

1. Inventory at 31 March 2020 was valued at P250, 000.

2. Buildings and plant and machinery are depreciated on a straight line basis (assume no residual value) at the following rates:

Buildings 5%

Plant and machinery 20%

3. The depreciation charges for the year to 31 March 2020 are to be apportioned as follows:

Cost of sales 60%

Distribution costs 20%

Administrative expenses 20%

4. Income taxes for the year to 31 March 2020 are estimated to be P135, 000.

5. The 10% loan was issued in 2017 and is repayable in five years.

6. The year-end provision for warranty claims has been estimated at P75, 000. Warranty costs are charged to administrative expenses.

Required:

1. a) Prepare Free Quote plcs statement of profit and loss for the year ended 31 March 2020 and; (10 marks)
2. b) The statement of financial position as at 31 March 2020. (10 marks)