All Shall Come to Pass Company was incorporated with an authorized capital of 40,000,000

equity shares of no par value.

The Trial Balance extracted from the ledgers of the company as at 31st December, 2019 is

as shown below:

                                                                            GH¢000 GH¢000                
Sales 90,675

Purchase of Raw materials 55,800
Selling and Distribution expenses 2,080
Wages and salaries of production staff 4,000
Salaries of Administrative staff 2,800

Inventory on hand 1/1/2019:
Raw materials 1,000
Work-in-Progress 1,000
Finished Goods. 3,000
Investment Property. 8,000
Buildings 10,000 2,000
Plant and Machinery. 35,800. 10,000
Fixtures and Equipment (office related) 8,000 3,000
Motor vehicles 2,600 1,200
Investment in shares. 5,000
12% Loan note (2019-2021). 6,000

Trade Payables. 1,360
Interim Equity dividends paid. 900
Bank overdrafts. 1,390
Overdraft interest and Bank charges. 800
Corporate tax. 1,200
Cash in hand. 1,100
Stated Capital-Equity shares (issued at GH¢1). 30,000
Capital Surplus 1/1/2019. 3,000
Income surplus 1/1/2019. 3,040
Investment income .... 1,500
Rental Income. 50
Administrative expenses 2,040
Production overheads excluding depreciation. 2,000
Loan interest paid. 600
VAT service. 3,535
Trade Receivables. 2,960
153,615         153,615

The following additional information is available:
i. VAT has been incorrectly recorded in the books. The sales and the purchases figure
in the Trial Balance include Output and Input Vat respectively. Vat Rate is 12.5%.
The figure of GH¢3,535,000 in the trial balance represents net VAT paid to VAT service for January-November transactions. VAT returns for December 2019 transactions were made on 25th January 2020.

ii. Inventory on hand on 31st December 2019 were as follows:

                                                                                    Cost NRV

                                                                                   GH¢000 GH¢000

Raw Materials 1, 240 1,200

WIP. 600 N/A

Finished goods 2,000 2,600

iii. Provision is to be made for:

- Directors’ Emoluments of GH¢20,000

- Auditors Remuneration of GH¢25,000

- Royalty of 1% of sales

iv. During the year the company paid the tax liability outstanding at 1/12/2018 of

GH¢800,000. Tax credit certificates amounting to GH¢160,000 were obtained by the

company in the year as result of withholding tax deducted at source by customers. An

amount of GH¢140,000 was also paid on account of 2019 provisional tax assessment.

Corporate tax rate applicable to All Shall Come to Pass Company Ltd is 30% of Net

profit.

v. The Investment Property had a fair value of GH¢8,400,000 as at 31st December 2019

according to a chartered surveyor.

vi. The policy of the company is to depreciate Property, Plant and Equipment as follows:

Buildings 2% p.a. on cost

Motor Vehicles 20% p.a. on cost

Fixtures or Equipment (office related) 10% p.a. on cost

Plant and Machinery 10% p.a. on cost

Full year depreciation on year of acquisition and non in year of disposal
vii. The building was revalued by the chartered surveyor at GH¢12,000 as at 31st

December 2019 in the accounts. The building is occupied between the factory and

office in the ratio of 60% and 40% respectively.

viii. During the year, the following additions to PPE were made.

                                                                                                  GH¢000

Motor vehicles 500

Fixtures and fitting and Equipment 1,000

These have been recorded in the books

Required:

Prepare the final accounts for internal use and in conformity with relevant International Financial

Reporting Standards.

a. Statement of Profit or Loss and Other Comprehensive Income for the year ended

31st December, 2019.

b. Statement of Changes in Equity for the year ended 31st December, 2019.

c. Statement of Financial Position as at 31st December, 2019.

NOTE: All workings must be shown

Answer rating: 100% (QA)

Statement of Profit or Loss and Other Comprehensive Income for the year ended 31st December 2019 GH000 Revenue 1 95305 Cost of Sales Raw materials used 2 55800 Changes in inventories of finished goods ... View the full answer