SECTION B Answer question 2 and not more than one further question from this section 2 The following is the trial balance of Twist Ltd. at 31 December 2012 100,000 30,000 150,000 13,000 75,000 12,650 6,600 1.250 860 5.948 656 Authorised, issued and called-up capital 100.000 equity shares of El cach 60,000 7% redeemable preference shares of 50p each Freehold buildings: cost Freehold buildings: accumulated depreciation Plant and machinery cost Plant and machinery accumulated depreciation Development costs (cost 10,000) Interim dividend paid Provision for doubtful debts Wages and salaries Bad debts written off Goodwill Listed investments Purchases / Sales Formation expenses Directors' remuneration Returns inwards / outwards Insurances Dividends received Retained earnings Light and heat Audit fee General reserve Share premium 10% debentures Inventories, as at 1 January 2012 Trade receivables / payables Bank 10.000 4,873 78 493 130,846 250 13,000 1.629 596 1,834 310 3,522 1,520 764 30,900 5,600 30,000 9,436 11,600 8,450 3.643 371,615 371,615 Question continues on next page University of London 2013 UL13/0001 Page 3 of 12 Additional information: 1. Tax on the profits for the year is estimated at 2,544. Insurances include 200 for the half-year ended on 31 March 2013 3. Electricity for the quarter to 31 January 2012 of 330 has not been accounted for 4. The provision for doubtful debts is to be adjusted to 5% of the trade receivables at the end of the year. The amounts shown in the trial balance for non-current assets (freehold buildings, plant and machinery and development costs) are balances at 1 January 2012. Provision is required for depreciation and amortisation for the year ended 31 December 2012. The Company's depreciation and amortisation methods are as follows: Freehold buildings: Straight-line over 50 years Plant and machinery: 20% on the reducing balance method Development costs: 10% straight-line 6 The value of goodwill has not fallen below the value recorded in the trial balance. 7. Formation expenses are to be written off against the general reserve. 8. Inventory at 31 December 2012 was 12,456. 9. The preference share dividends and the debenture interest are outstanding at the end of the year. 10. It is proposed to pay a final dividend on the equity shares of 6.25 pence per share. 11. The directors have decided to transfer 4,000 to the general reserve. Required: Prepare Twist Ltd's: (a) Income statement for the year ended 31 December 2012. (14 marks)
