ABC a limited liability company, has an accounting year end of 31 October.
The accountant is
preparing the financial statements as at 31 October 2022 and requires your assistance. The
following trial balance has been extracted from the general ledger.
Account Dr. Cr.
$'000 $'000
Buildings at cost 740
Buildings accumulated depreciation, 1 November
2021 60
Plant at cost 220
Plant accumulated depreciation, 1 November 2021 110
Bank balance 70
Revenue 1,800
Net purchases 1,140
Inventory at 1 November 2021 160
Cash 820
Trade payables 250
Trade receivables 320
Administrative expenses 325
Allowance for receivables at 1 November 2021 10
Long term Debt (10% ) 800
Retained earnings at 1 November 2021 130
Equity shares, $1 415
Share premium account 80
3,725, 3,725
The following additional information is also available:
– Debts amounting to $20,000 are to be written off. The allowance for receivables
is to be maintained at 5% of remaining trade receivables. The allowance for
receivables is treated as an administrative expense.
– Plant is depreciated at 20% per annum using the reducing balance method and
buildings are depreciated at 5% per annum on their original cost.
Depreciation is treated as a cost of sales expense.
– Closing inventory has been counted and is valued at $75,000.
– An invoice of $15,000 for energy costs relating to the quarter ended 30 November
20X7 was received on 2 December 2022. Energy costs are included in
administrative expenses.
– Corporate Tax has been estimated to be $30,000
– The loan was taken on 1st May 2022 (Interest on loan is 10%) and interest has
not been accrued.
Required: Prepare a statement of Profit or Loss and a statement of Financial position as at 31st
October 2022.
