Lecture notes Financial Accounting 3 (ACC3001)

GS 6: King and Queen 42 marks

King Ltd (King) is listed on the JSE Ltd. King's financial director approached you to
help him with the preparation of the consolidated financial statements of the King
group for the financial year ended 31 December 20.11. The following abridged draft
financial statements of King and the company, in which it has an interest, are
presented to you:

STATEMENTS OF FINANCIAL POSITION AT 31 DECEMBER 20.11:
King Queen
Rand Rand
Property, plant and equipment – carrying amount 151 250 137 500
Investment in Queen 70 000 -
Inventory 30 200 12 000
Receivables 13 350 49 800
Bank 10 100 3 700
Total assets 274 900 203 000
Share capital
(60 000 ordinary shares) 60 000 35 000
Retained earnings 170 220 142 950
Deferred tax 7 400 7 050
Payables 37 280 18 000
Total equity and liabilities 274 900 203 000

ABSTRACT OF STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR
ENDED 31 DECEMBER 20.11:
King Queen
Rand Rand
Retained earnings
Balance at the beginning of the year 153 000 138 540
Total comprehensive income 26 970 9 410
Dividend paid – 31 December (9 750) (5 000)
Balance at the end of the year 170 220 142 950

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 20.11:
King Queen
Rand Rand
Gross profit 46 890 30 010
Other income 4 000 3 000
Other expenses (16 350) (19 940)
Profit before tax 34 540 13 070
Income tax expense (7 570) (3 660)
Profit for the year 26 970 9 410
Other comprehensive income - -
Total comprehensive income 26 970 9 410