Reference no: EM132626087
The trial balance for Rose Ltd for the year ended 30"' June 2020 is as follows:
|
dedit |
Credit |
|
$0 |
$0 |
| Administrative expenses |
12,150 |
|
| Selling expenses |
8125 |
|
| Production wages and salaries |
5,975 |
|
| Selling and distribution wages and salaries |
4,520 |
|
| Administrative wages and salaries |
4,000 |
|
| Distribution costs |
2,875 |
|
| Cash at bank |
8,250 |
|
| Share capital |
|
12250 |
| Trade receivables |
9,300 |
|
| Provision for doubtful debts |
|
450 |
| Trade payables |
|
8,250 |
| Motor vehicles: Cost |
14,000 |
|
| Motor vehicles: Accumulated depreciation at 1st Jul 2019 |
|
1,800 |
| Plant and machinery: Cost |
20,000 |
|
| Plant 8 Machinery. Accumulated depreciation at 1st Jul 2019 |
|
7,850 |
| Accumulated depreciation: Freehold Buildings at 1st Jul |
17,000 |
|
| Accumulated depreciation: Freehold Buildings at 1st Jul 2019 |
|
3,250 |
| Dividend paid |
1,300 |
|
| Retained profits at 1st Jul 2019 |
|
10,800 |
| Intangible Asset |
900 |
|
| Inventory at 1st Jul 2019 |
6,200 |
|
| Sales |
|
75,120 |
| Bad debt expense |
475 |
|
| Purchases |
24,200 |
|
| Bank interest paid |
500 |
|
| Long term bank loan repayable in 2026 |
|
20 000 |
|
139,770 |
139,770 |
Notes:
1) Inventory held on 30th June 2020 was $7,750,000.
2) The intangible asset needs to be written down to $450,000, with the related expense included in cost of sales.
3) The Provision for doubtful debts should be increased to 5% of trade receivables, expenses are to be included in selling and distribution costs.
4) The bank loan attracts interest at a rate of 5% pa. Not all of the interest on the bank loan has been paid during the year.
5) Freehold Land and Buildings cost includes $1,000,000 for the cost of land.
6) Depreciation is to be provided as follows: a. Buildings 2% straight line, to be included as an administrative expense b. Plant and Machinery 10% straight line, to be included in cost of sales c. Motor vehicles 25% reducing balance, to be included as a selling and distribution cost
7) Taxation for the year is estimated to be $1,915,000. Required:
Question 1: Prepare an income statement for Rose Ltd for the year ending 30th June 2020 AND a statement of financial position (balance sheet) as at that date, in a format suitable for publication to the shareholders and in accordance with the requirements of International Accounting Standards.