Section A Question 1 Working - Journal Entries
a Note Number Accounts DR Cr
Inventory at 31 December 2015 is £146,000. Following an review of inventory, it was ££
1 noted that £4,240 of finished goods was damaged because of improper storage, it will 1 Closing Inventory - SPLO 4,240
be given away free to a local children's charity. Inventory - SFP 4,240
2 Depreciation is to be charted as follows: 3 Revenue - SPLOCI 30,000
Disposal A/c - F&F 30,000
Buildings 2% Straight Line on Cost Disposal A/c - F&F 80,000
Fixtures & Fittings 15% Straight Line on Cost Property, Plant & Equipment (PPE) 80,000
Trucks 25% Reducing Balance Accumulated Depreciation 60,000
Fixtures and Fittings wwere sold for £30,000 on 1 December 2015. These were Disposal A/c - F&F 60,000
3 purchased in June 2010 for £80,000. The proceeds from the sale were included (in Disposal A/c - F&F 10,000
error) in 'Revenue' on the trial balance. Profit on Disposal - SPLOCI 10,000
4 On 31 December 2015 a professional valuation from Greenwood Surveyors Ltd was 5 Allowance for Doubtful D 80,000
received for the building. Greenwood Surveyors valued the building at £900,000. Allowance for Doubtful Debts - SPF 80,000
On 28 February 2016 TOYSRU received notice that one of its customers had ceased to
5 trade. This customer owed TOYSRU £80,000 at 31 December 2015 which had
increased to £ 130,000 at 28 February 2016. No adjustment has been made to the
financial statements to account for this. 0
6 Current Tax Payable - SP 23,000
Income Tax - SPLOCI 23,000
The current tax payable amount outstanding for 2014 was paid in full in July 2014.
6 While the transaction was correctly recorded in the firm's bank account, the 'Income Income Tax 28,000
Tax' account was debited by mistake. The income tax amount for 2014 is estimated at Current Tax Payable 28,000
£28,000.
7 Finance Costs - SPLOCI 14,000
7 The interest of 4% on the loan needs to be provided for. Accruals - SFP 14,000
8 TOYSRU wrote off additional bad debts of £5,000. The allowance for doubtful debts 8 Bad Debts Write off - SPL 5,000
should be set at 5%. Trade Receivables 5,000
9 TOYSRU Limited rented and paid for a strorage warehouse for a year with a rental Allowance for Doubtful D 6,450
period commencing on 1 March 2015. The amount paid was £24,000. Allowance for Doubtful Debts - SFP 6,450
10 Expenses are to be allocated evenly between Distribution Costs and Administrative Expenses. 9 Prepayment - SFP 4,000
Rent - SPLOCI 4,000
2 Depreciation Buildings S 24,000
Accumulated Depreciation Buildings - SF 24,000
Depreciation F&F SPLOCI 45,900
Accumulated Depreciation F&F - SFP 45,900
Depreciation Trucks SPL 30,000
Working 1 - Property, Plant & Equipment Accumulated Depreciation Trucks - SFP 30,000
Fixtures &
Buildings Fittings Trucks Total
£ £ £ £ 4 Buildings at Cost - SFP 44,000
Cost 1,200,000 386,000 246,000 1,832,000 0 44,000
Accumulated Depreciation 320,000 214,600 126,000 660,600
880,000 171,400 120,000 1,171,400
Disposal - Cost 80,000
Disposal - Accumulated Depreciation 60,000
880,000 151,400 120,000 1,151,400
Depreciation - Buildings 24,000 24,000
Depreciation - F&F 45,900 45,900
Depreciation charge - Trucks 30,000 30,000
Sub total 856,000 105,500 90,000 1,051,500
Revaluation Gain 44,000 44,000
NBV at 31/12/15 900,000 105,500 90,000 1,095,500
P&L Notes
, Distribution
Working 2 - Expenses Cost of Sales Costs Administration Expenses
£ £ £ Presentation of Financial Statements in IAS 1 Format
Opening Inventory 124,000
Purchases 1,248,600
Purchases Returns 6,000 Toysru Limited Statement of Profit or Loss and Other Comprehensive Income for the year-ended 31 Dec 2015
Closing Inventory 141,760
Expenses £ £
242,000 245,800 Revenue 2,106,300
Bad debt written off 2,500 2,500 Cost of sales (Note 1) 1,224,840
Allowance for Doubtful debts 43,225 43,225 Gross profit 881,460
Rent -4,000 Administrative expenses (Note 2) 341,475
Depreciation Buildings 12,000 12,000 Distribution expenses (Note 2) 333,675
Depreciation Plant & Equipment 22,950 22,950 Finance 14,000
Depreciation Office Equipment 15,000 15,000 Profit on Disposal 10,000
679,150
1,224,840 333,675 341,475
Profit before tax 202,310
Income tax expense 28,000
Profit/(Loss) for the year 174,310
Other Comprehensive Income
Revaluation Gain 44,000
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR 218,310
Other acceptable Profit
Toysru Limited Statement of Financial Position as at 31 Dec 2015
£
Non-current assets
Property, plant, and equipment (Note 1) 1,095,500
. Current Assets
Inventories 141,760
Trade receivables 259,150
Prepayments 4,000
Cash and cash equivalents 86,400
491,310
Total assets 1,586,810
EQUITY AND LIABILITIES
Equity
Share capital 200,000
Retained earnings 763,610
Revaluation reserve 86,000
Total equity 1,049,610
Non-current liabilities
Long term borrowings 350,000
Total non-current liabilities 350,000
Current liabilities
Trade and other payables 159,200
Current tax payable 28,000
Total current liabilities 187,200
Total liabilities 537,200
Total equity and liabilities 1,586,810
a Note Number Accounts DR Cr
Inventory at 31 December 2015 is £146,000. Following an review of inventory, it was ££
1 noted that £4,240 of finished goods was damaged because of improper storage, it will 1 Closing Inventory - SPLO 4,240
be given away free to a local children's charity. Inventory - SFP 4,240
2 Depreciation is to be charted as follows: 3 Revenue - SPLOCI 30,000
Disposal A/c - F&F 30,000
Buildings 2% Straight Line on Cost Disposal A/c - F&F 80,000
Fixtures & Fittings 15% Straight Line on Cost Property, Plant & Equipment (PPE) 80,000
Trucks 25% Reducing Balance Accumulated Depreciation 60,000
Fixtures and Fittings wwere sold for £30,000 on 1 December 2015. These were Disposal A/c - F&F 60,000
3 purchased in June 2010 for £80,000. The proceeds from the sale were included (in Disposal A/c - F&F 10,000
error) in 'Revenue' on the trial balance. Profit on Disposal - SPLOCI 10,000
4 On 31 December 2015 a professional valuation from Greenwood Surveyors Ltd was 5 Allowance for Doubtful D 80,000
received for the building. Greenwood Surveyors valued the building at £900,000. Allowance for Doubtful Debts - SPF 80,000
On 28 February 2016 TOYSRU received notice that one of its customers had ceased to
5 trade. This customer owed TOYSRU £80,000 at 31 December 2015 which had
increased to £ 130,000 at 28 February 2016. No adjustment has been made to the
financial statements to account for this. 0
6 Current Tax Payable - SP 23,000
Income Tax - SPLOCI 23,000
The current tax payable amount outstanding for 2014 was paid in full in July 2014.
6 While the transaction was correctly recorded in the firm's bank account, the 'Income Income Tax 28,000
Tax' account was debited by mistake. The income tax amount for 2014 is estimated at Current Tax Payable 28,000
£28,000.
7 Finance Costs - SPLOCI 14,000
7 The interest of 4% on the loan needs to be provided for. Accruals - SFP 14,000
8 TOYSRU wrote off additional bad debts of £5,000. The allowance for doubtful debts 8 Bad Debts Write off - SPL 5,000
should be set at 5%. Trade Receivables 5,000
9 TOYSRU Limited rented and paid for a strorage warehouse for a year with a rental Allowance for Doubtful D 6,450
period commencing on 1 March 2015. The amount paid was £24,000. Allowance for Doubtful Debts - SFP 6,450
10 Expenses are to be allocated evenly between Distribution Costs and Administrative Expenses. 9 Prepayment - SFP 4,000
Rent - SPLOCI 4,000
2 Depreciation Buildings S 24,000
Accumulated Depreciation Buildings - SF 24,000
Depreciation F&F SPLOCI 45,900
Accumulated Depreciation F&F - SFP 45,900
Depreciation Trucks SPL 30,000
Working 1 - Property, Plant & Equipment Accumulated Depreciation Trucks - SFP 30,000
Fixtures &
Buildings Fittings Trucks Total
£ £ £ £ 4 Buildings at Cost - SFP 44,000
Cost 1,200,000 386,000 246,000 1,832,000 0 44,000
Accumulated Depreciation 320,000 214,600 126,000 660,600
880,000 171,400 120,000 1,171,400
Disposal - Cost 80,000
Disposal - Accumulated Depreciation 60,000
880,000 151,400 120,000 1,151,400
Depreciation - Buildings 24,000 24,000
Depreciation - F&F 45,900 45,900
Depreciation charge - Trucks 30,000 30,000
Sub total 856,000 105,500 90,000 1,051,500
Revaluation Gain 44,000 44,000
NBV at 31/12/15 900,000 105,500 90,000 1,095,500
P&L Notes
, Distribution
Working 2 - Expenses Cost of Sales Costs Administration Expenses
£ £ £ Presentation of Financial Statements in IAS 1 Format
Opening Inventory 124,000
Purchases 1,248,600
Purchases Returns 6,000 Toysru Limited Statement of Profit or Loss and Other Comprehensive Income for the year-ended 31 Dec 2015
Closing Inventory 141,760
Expenses £ £
242,000 245,800 Revenue 2,106,300
Bad debt written off 2,500 2,500 Cost of sales (Note 1) 1,224,840
Allowance for Doubtful debts 43,225 43,225 Gross profit 881,460
Rent -4,000 Administrative expenses (Note 2) 341,475
Depreciation Buildings 12,000 12,000 Distribution expenses (Note 2) 333,675
Depreciation Plant & Equipment 22,950 22,950 Finance 14,000
Depreciation Office Equipment 15,000 15,000 Profit on Disposal 10,000
679,150
1,224,840 333,675 341,475
Profit before tax 202,310
Income tax expense 28,000
Profit/(Loss) for the year 174,310
Other Comprehensive Income
Revaluation Gain 44,000
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR 218,310
Other acceptable Profit
Toysru Limited Statement of Financial Position as at 31 Dec 2015
£
Non-current assets
Property, plant, and equipment (Note 1) 1,095,500
. Current Assets
Inventories 141,760
Trade receivables 259,150
Prepayments 4,000
Cash and cash equivalents 86,400
491,310
Total assets 1,586,810
EQUITY AND LIABILITIES
Equity
Share capital 200,000
Retained earnings 763,610
Revaluation reserve 86,000
Total equity 1,049,610
Non-current liabilities
Long term borrowings 350,000
Total non-current liabilities 350,000
Current liabilities
Trade and other payables 159,200
Current tax payable 28,000
Total current liabilities 187,200
Total liabilities 537,200
Total equity and liabilities 1,586,810
