Reference no: EM131809839

Question - The following are the balances extracted from the financial records of Sita Ltd as at 31 May 2011.

	£OOO	£OOO
Building at cost	642
Buildings accumulated depreciation at 1 June 2010		48
Plant at cost	176
Plant, accumulated depreciation at 1 June 2010		88
Land at cost	188
Bank balance	30
Revenue		1,510
Purchases	884
Discount received		76
Return inwards	28
Wages & salaries	144
Insurance expenses	14
Inventory at 1 June 2010	128
Trade Payables		200
Trade receivables	256
Loan notes interest	4
Administration Expenses	64
Energy expenses	70
Allowance for receivables at		8
Directors remuneration	56
Retained earnings at 1 June 2010		104
Dividend paid	20
£1 Ordinary shares		570
Share premium account		60
10% loan notes		40
	2,704	2,704

Additional information as at 31 May 2011:

1. Closing inventory at 31 May 2011 has been valued at £60,000.

2. Energy expenses of £13,000 for May 2011 have not been invoiced or recorded.

3. Insurance expenses include £4000 for June and July 2011.

4. The allowance for receivables is to be increased to 5% of trade receivables and the increase is to be allocated to administrative expenses.

5. Plant is depreciated at 25% per annum using reducing balance method. The entire amount should be allocated to cost of sales.

6. Building are depreciated at 5% per annum on their original cost, allocated 50% to cost of sales, 30% to distribution cost and 20% to administrative expenses.

7. Income tax of £40,000 is to be provided for the year.

8. The expenses listed below should be apportioned as indicated:

	Cost of Sales	Distribution cost	Administrative Expenses
Discount received	-	-	100%
Energy expenses	50%	20%	30%
Insurance expenses	-	50%	50%
Wages and salaries	40%	35%	25%
Directors' remuneration	-	-	100%

Required: Prepare the following financial statement for Sita Ltd in accordance with IAS 1, Presentation of financial statements:

1. Income statement for the year ended 31 May 2011.

2. Statement of financial position as at 31 May 2011.