Principles and Practice of Financial Accounting

Principles and Practice of
Financial Accounting

Section A
Question 1
1 (a)
Statement of comprehensive income for the year to 31 Decem-
ber 2019
£000 £000
Revenue 5165
Cost of sales (W1) 2833
Gross profit 2332
Other income (Rent) 66
Distribution costs (W2, W3 & W4) 553
Administration cost 946 1499
Profit from operations 899
Interest on loan (170*10%) 17
Profit before tax 882
Taxation (140-6) 134
Profit for the year 748
1(b)
Statement of changes in equity for the to 31 december 2019
Share
capital
Revaluation
reserve
Retained
earnings
Total
equity
£000 £000 £000 £000
Balance 500 1055 1555
Total comprehensive income 350 748 1098
Dividends paid 32 32
Balance at 31 december 2019 500 350 1771 2621
1(c)
Statement of financial position as at 31 December 2019
£000 £000
Assets (in order of permanence)
Non-current assets
Property, plant and equipment (W3) 2942
1

Non depreciable land 1755
Current assets
Inventory 432
Trade receivables (356-6-7) 343
775
5472
Equity
Revaluation reserve 350
Retained earnings (1053+748-32) 1769 2119
Liabilities
Current liabilities
Trade and other payables (TB) 414
Bank (TB) 107
Tax payable 140 661
Total equity and liabilities 2780
5472
Working notes:
W1 Cost of goods sold
£000
Opening stock 432
Purchase 2826
Closing stock 425
Cost of goods sold 2833
£000
W2 Depreciation on equipment
Equipment at cost 480
2