- 20 Marks
FR – Nov 2015 – L2 – Q2 – Presentation of Financial Statements (IAS 1)
Prepare a statement of profit or loss and other comprehensive income for Well-Being Plc.
Question
The following trial balance has been extracted from the books of Well-Being Plc as at March 31, 2014:
| N’000 | N’000 | |
|---|---|---|
| Land at cost | 360 | |
| Building at cost | 750 | |
| Equipment at cost | 588 | |
| Vehicles at cost | 852 | |
| Goodwill | 900 | |
| Accumulated depreciation: | ||
| – Buildings | 270 | |
| – Equipment | 228 | |
| – Vehicles | 396 | |
| Inventory at April 1, 2013 | 321 | |
| Trade receivables and payables | 549 | 351 |
| Allowance for receivables | 24 | |
| Bank balances | 171 | |
| Current taxation | 18 | |
| Ordinary shares of N1 each | 600 | |
| Retained earnings at April 1, 2013 | 1,509 | |
| Revenue | 4,296 | |
| Purchases | 1,464 | |
| Directors’ fees | 450 | |
| Wages and salaries | 828 | |
| General distribution costs | 303 | |
| General administrative expenses | 558 | |
| Dividend paid | 60 | |
| Rent received | 90 | |
| Disposal of vehicle | 30 | |
| Total | 7,983 | 7,983 |
Additional information:
- The company’s non-depreciable land was valued at ₦900,000 on March 31, 2014, and this valuation is to be incorporated into the accounts.
- Depreciation policy:
- Building: 4% p.a. (straight line)
- Equipment: 40% p.a. (reducing balance)
- Vehicles: 25% p.a. (straight line) In all cases, a full year’s depreciation is charged in the year of disposal.
- On February 1, 2014, a vehicle used entirely for administrative purposes was sold for ₦30,000 (cost ₦132,000). No other entries were made.
- Depreciation is apportioned as follows:
- Buildings: 50% distribution, 50% administrative
- Equipment: 25% distribution, 75% administrative
- Vehicles: 70% distribution, 30% administrative
- Inventory at March 31, 2014, is valued at ₦357,000.
- Trade receivables include a debt of ₦24,000 to be written off. The allowance for receivables is to be adjusted to 4% of receivables after the write-off.
- Current tax for the year ended March 31, 2013, was over-estimated by ₦18,000. Current tax for 2014 is estimated at ₦90,000.
- One-quarter of wages and salaries was paid to distribution staff and the remaining three-quarters to administrative staff.
- General administrative expenses include bank overdraft interest of ₦27,000.
Required:
Prepare a statement of profit or loss and other comprehensive income for the year ended March 31, 2014.
Find Related Questions by Tags, levels, etc.
- Tags: Administrative Expenses, Depreciation, Inventory, Statement of Profit or Loss
- Level: Level 2
- Topic: Presentation of Financial Statements (IAS 1)
- Series: NOV 2015
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