The following trial balance of Samson Plc (Samson) is available as of 30 September 2021 ...

  

 
 
 

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The following trial balance of Samson Plc (Samson) is available as of 30 September 2021 £ Revenue Investment income Property, plant and equipment at carrying value on 1 October 2020 Patents at carrying value on 1 October 2020 Research and development Inventories as at 1 October 2020 Other long term liabilities Ordinary share capital (E1 shares) Share premium Income tax Trade and receivables Cash and cash equivalents other Retained earnings Trade and other payables Cost of sales Operating expenses Provisions (Note 1) (Note 2) (Note 3) (Note 5) (Note 4) (Note 6) (Note 7) (Note 7) (Note 9) (Note 8) 1,799,048 142,400 181,600 94,800 456,000 47,200 100,000 370,000 177,500 6,000 430,000 27,400 49,632 61,600 845,180 864,000 240,000 The following further information is provided 1. Samson sold goods on 1 October 2020 for £400,000 with a one-year interest-free credit period and the full amount was included in sales and trade receivables. Samson normally offers credit terms to customers at a rate of 5% pa. Allempled Off 2. Samson launched new software in November 2020. The sale of this is outsourced to Peterson Plc who pays Samson 15% royalties on all sales. Peterson sends monthly reports of the sales transactions to Samson who then records the royalties as investment Income. Samson received the September sales reports on 30 September 2021 which showed total sales of £96,000 for the month of September 2021. Samson is yet to record this in their books of accounts. BUSI2150-E1 3 4. BUSI2150-E1 3. Samson revalued its equipments on 31 March 2021 and found that one of its equipments had become defective. The equipment was purchased on 1 October 2018 for £76,800. The review on 30 September 2021 showed that if the equipment were to be retained it would generate future cash flows with a present value of £20,000. If the equipment were to be sold it would realise £22,000 and the selling costs would amount to £3,000. If Samson decided to replace the equipment with a new one, the purchase price of the new equipment would cost Samson £112,000. Samson has not recorded this change as at 30 September 2021. Samson depreciates all equipments at 30% reducing balance method and charges it to Cost of Sales. During the Samson spent year £456,000 on research and development of two new products, Alpha and Beta. On 1 October 2020 Alpka was considered to be commercially viable and was launched on 1 April 2021. So far Aplha has been popular among the customers. The estimated useful life of Alpha is two (2) years. Costs incurred on Alpha between 1 October 2020 and 31 March 2021 included £52,000 on researching the product; £236,000 on development activities; £19,200 on pre-launching activities and £11,800 on staff training. Beta is comparatively new and has not yet been launched although Samson has spent £137,000 on developing the product. At this stage Samson is unsure whether or not 5. 6. 7. 8. 9. Mlevyled 1 Samson invested in patents during 2020 which had a useful life of two (2) years. A patent that cost £6,000 on 1 May 2020 was sold on 30 April 2021 at its carrying amount. Cash received on this was credited to cost of sales. Patents in the trial balance had a cost of E118,000 and accumulated amortisation of £23,200. All expenses related to patents will be charged to administration expenses Inventories were valued at E51,000 on 30 September 2021. On 1 September 2021 Samson issued further 100,000 £1 equity shares at £1.2 per share. The accountant of Samson Plc had not recorded this entry as of 30 September 2021. On 1 October 2020 a legal claim was made against Samson for poor quality of products by one of its customers. Based on the claims made by the customer, it seems that Samson will have to pay a heavy penalty. However, the lawyers of Samson are attempting an out of court settlement which is estimated at £240,000. The provision in trial balance pertains to this potential settlement and the costs were debited to other operating costs. Due to cashflow issues, it is expected that this amount will be settled after October 2022. The appropriate discount rate is 7%. The income tax liability for the year ended 30 September 2021 has now been estimated at £34,000. The amount shown in the trial balance is the balance remaining after paying the liability at 30 September 2020, which was settled at less than originally estimated. Requirement You are required to prepare a Statement of Profit or Loss and other comprehensive income, Statement of changes in equity and Statement of financial position as at 30 September 2021. Include the disclosures necessary with reference to the respective Accounting Standards (IAS/IFRS). (Total 40 marks) The following trial balance of Samson Plc (Samson) is available as of 30 September 2021 £ Revenue Investment income Property, plant and equipment at carrying value on 1 October 2020 Patents at carrying value on 1 October 2020 Research and development Inventories as at 1 October 2020 Other long term liabilities Ordinary share capital (E1 shares) Share premium Income tax Trade and receivables Cash and cash equivalents other Retained earnings Trade and other payables Cost of sales Operating expenses Provisions (Note 1) (Note 2) (Note 3) (Note 5) (Note 4) (Note 6) (Note 7) (Note 7) (Note 9) (Note 8) 1,799,048 142,400 181,600 94,800 456,000 47,200 100,000 370,000 177,500 6,000 430,000 27,400 49,632 61,600 845,180 864,000 240,000 The following further information is provided 1. Samson sold goods on 1 October 2020 for £400,000 with a one-year interest-free credit period and the full amount was included in sales and trade receivables. Samson normally offers credit terms to customers at a rate of 5% pa. Allempled Off 2. Samson launched new software in November 2020. The sale of this is outsourced to Peterson Plc who pays Samson 15% royalties on all sales. Peterson sends monthly reports of the sales transactions to Samson who then records the royalties as investment Income. Samson received the September sales reports on 30 September 2021 which showed total sales of £96,000 for the month of September 2021. Samson is yet to record this in their books of accounts. BUSI2150-E1 3 4. BUSI2150-E1 3. Samson revalued its equipments on 31 March 2021 and found that one of its equipments had become defective. The equipment was purchased on 1 October 2018 for £76,800. The review on 30 September 2021 showed that if the equipment were to be retained it would generate future cash flows with a present value of £20,000. If the equipment were to be sold it would realise £22,000 and the selling costs would amount to £3,000. If Samson decided to replace the equipment with a new one, the purchase price of the new equipment would cost Samson £112,000. Samson has not recorded this change as at 30 September 2021. Samson depreciates all equipments at 30% reducing balance method and charges it to Cost of Sales. During the Samson spent year £456,000 on research and development of two new products, Alpha and Beta. On 1 October 2020 Alpka was considered to be commercially viable and was launched on 1 April 2021. So far Aplha has been popular among the customers. The estimated useful life of Alpha is two (2) years. Costs incurred on Alpha between 1 October 2020 and 31 March 2021 included £52,000 on researching the product; £236,000 on development activities; £19,200 on pre-launching activities and £11,800 on staff training. Beta is comparatively new and has not yet been launched although Samson has spent £137,000 on developing the product. At this stage Samson is unsure whether or not 5. 6. 7. 8. 9. Mlevyled 1 Samson invested in patents during 2020 which had a useful life of two (2) years. A patent that cost £6,000 on 1 May 2020 was sold on 30 April 2021 at its carrying amount. Cash received on this was credited to cost of sales. Patents in the trial balance had a cost of E118,000 and accumulated amortisation of £23,200. All expenses related to patents will be charged to administration expenses Inventories were valued at E51,000 on 30 September 2021. On 1 September 2021 Samson issued further 100,000 £1 equity shares at £1.2 per share. The accountant of Samson Plc had not recorded this entry as of 30 September 2021. On 1 October 2020 a legal claim was made against Samson for poor quality of products by one of its customers. Based on the claims made by the customer, it seems that Samson will have to pay a heavy penalty. However, the lawyers of Samson are attempting an out of court settlement which is estimated at £240,000. The provision in trial balance pertains to this potential settlement and the costs were debited to other operating costs. Due to cashflow issues, it is expected that this amount will be settled after October 2022. The appropriate discount rate is 7%. The income tax liability for the year ended 30 September 2021 has now been estimated at £34,000. The amount shown in the trial balance is the balance remaining after paying the liability at 30 September 2020, which was settled at less than originally estimated. Requirement You are required to prepare a Statement of Profit or Loss and other comprehensive income, Statement of changes in equity and Statement of financial position as at 30 September 2021. Include the disclosures necessary with reference to the respective Accounting Standards (IAS/IFRS). (Total 40 marks)

Answer rating: 100% (QA)

Based on the information provided lets prepare the required financial statements as of 30 September 2021 including the necessary disclosures in accord... View the full answer