Prepare the following: i. Statement of profit and loss ii. Statement of changes in equity iii. Statement of financial position
1. The following balances were obtained from the books of The Hartland Ltd as at December 31, 2015:
DETAILS
DR
CR
Premises
800,000
10% Mortgage
250,000
40,000
100,000
Debtors
110,000
Creditors
65,000
General reserves
30,000
Management fees
30,000
Ordinary shares @ $0.50
200,000
5% Preference shares @ $1
200,000
Share premium
50,000
Motor vehicle
80,000
Prov. for
12,000
10% Debenture
120,000
Mortgage interest
7,000
Debenture interest
5,000
Cost of sales
750,000
Closing stock
80,000
Insurance
20,000
Wages & salaries
60,000
Interim ordinary shares dividend
2,000
Bank
53,000
Sales
1,100,000
Commission received
4,000
2,084,000
2,084,000
Notes:
a. Provide for depreciation on motor vehicle at 5% on the reducing balance
b. Insurance is prepaid by $4,000 while wages and salaries is owing by $20,000
c. The goodwill should be written down by 25%
d. Transfer $25,000 from profits to the general reserves
e. Corporation tax is estimated at $30,000
f. The following items of expense should be apportioned:
Admin
Sell & Dist.
Insurance
50%
50%
Wages & salaries
70%
30%
Management fees
80%
20%
Depreciation charges
50%
50%
g. Prior to the end of the year the directors approved the following:
i.
ii. a new issue of 100,000 ordinary shares with par of $0.50 per share; amount collected was $75,000
Required:
Prepare the following:
i. Statement of
Show appropriate workings and disclosures
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