Dr. Cr. (GH₵) (GH₵) Stated capital 310 Income surplus at 1 January 2017 456 Inventory at 1 January 2017 236 Turnover 1,468 Purchases 856 Salaries 46 Directors salaries (admin expense) 116 Land & building at cost 550 Plant & equipment at cost 578 Land & building- accumulated depreciation as at 1 January 2017 154 Plant & equipment –accumulated depreciation as at 1 January 2017 266 Bank interest received 6 Sundry expenses 56 Trade receivables 110 Trade payables 122 Accruals 42 Cash at bank 43 Dividends paid 36 Administrative expenses 183 Interest paid 14 2,824 2,824 The following information is also relevant: (1) Inventory at 31st December 2017 is GH₵256 (2) The tax liability for the year is estimated to be 20% of the profit before tax. 4 (3) The original cost of land and buildings is made up of GH₵100 land and GH₵450 buildings. Buildings are used in administration and depreciation is charged on a straight line basis over the estimated useful life of 50 years. (4) Plant & equipment are used in distribution and depreciation is charged at 15% reducing balance basis. (5) Trade receivables include GH₵4 owed by a customer who is in liquidation. Due to the economic climate the company wish to make an allowance of 5% of remaining debts. (6) No account has been made for the audit fee of GH₵10 (admin expense). (7) Unless otherwise stated, expenditure should be split evenly between administration and distribution costs. Required: Prepare the statement of comprehensive income and statement of financial position for the year ended 31st December 2017.
Dr.
Cr.
(GH₵)
(GH₵)
Stated capital
310
Income surplus at 1 January 2017
456
Inventory at 1 January 2017
236
Turnover
1,468
Purchases
856
Salaries
46
Directors salaries (admin expense)
116
Land & building at cost
550
Plant & equipment at cost
578
Land & building-
154
Plant & equipment –accumulated depreciation as at 1 January 2017
266
Bank interest received
6
Sundry expenses
56
Trade receivables
110
Trade payables
122
Accruals
42
Cash at bank
43
Dividends paid
36
Administrative expenses
183
Interest paid
14
2,824
2,824
The following information is also relevant:
(1) Inventory at 31st December 2017 is GH₵256
(2) The tax liability for the year is estimated to be 20% of the profit before tax.
4
(3) The original cost of land and buildings is made up of GH₵100 land and GH₵450 buildings. Buildings are used in administration and depreciation is charged on a straight line basis over the estimated useful life of 50 years.
(4) Plant & equipment are used in distribution and depreciation is charged at 15% reducing
(5) Trade
(6) No account has been made for the audit fee of GH₵10 (admin expense).
(7) Unless otherwise stated, expenditure should be split evenly between administration and distribution costs.
Required:
Prepare the statement of comprehensive income and
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The statement of financial position of Michael Limited at 31 December, 2017 and 2018 were as follows:
Notes
31/12/2017
31/12/2018
GHȼ000
GHȼ000
Non-current assets
Tangible assets
1
730
1,100
Investment at cost
2
100
50
830
1,150
Current assets
Inventory
80
110
Receivables
110
180
Cash at banks
20
30
210
320
1,040
1,470
Equity
Stated capital
4
500
680
Capital surplus
5
100
200
Income surplus
200
190
800
1,070
Non-current liabilities
10% loan notes
3
100
150
900
1,220
Current liabilities
Trade payables
100
120
Bank overdraft
40
130
140
250
1,040
1,470
Notes
1. Tangible assets: During the year tangible assets with a net book value of GHȼ80,000 were sold for GHȼ60,000. The depreciation charge for the year on all tangible assets held at the end of the year was GHȼ100,000.
2. Investments: Investments which cost GHȼ50,000 were sold during the year for GHȼ40,000.
3. 10% Loan notes: GHȼ50,000 of 10% loan notes were issued on 1 January 2018. All interest to 31st December has been paid.
4. Stated capital: The Company’s stated capital at 31 December 2017 consisted of GHȼ500,000 of ordinary shares. Another 80,000 shares were issued during the year at a price of GHȼ2.25 per share.
5. Capital surplus: The freehold land and buildings were revalued upwards by GHȼ100,000 during the year.
Required:
Prepare the company’s statement of cash flows for the year ended 31 December 2018 complying with IAS 7 Statements of cash flows. Ignore taxation.
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