Question 1 The following trial balance is extracted from the books of Alpha Ltd as at...

 

 

 

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Question 1 The following trial balance is extracted from the books of Alpha Ltd as at 30 June 2021. Dr Cr $000 $000 Inventory 1 July 2020 45 Sales 1,500 Rental income 28 Land at cost 330 Buildings - at cost 950 -accumulated depreciation 418 Vehicles at cost 150 - accumulated depreciation 5.4 54 Equipment Accounts receivable and payable General distribution costs General administrative expenses Director's fees 80 125 99 145 220 78 Dividend paid 77 Ordinary shares 220 Allowance for doubtful debts 12 Bank 18 Purchases 450 Retained earnings at 1 July 2020 196 10% Long term loan 110 Long term loan interest 5 2,655 2,655 The following additional information is available: (1) The company's depreciation policy is as follows: Buildings Vehicles 4% p.a. straight-line 20% p.a. reducing balance Equipment 20% p.a. straight-line In all cases, a full year's depreciation is charged in the year of acquisition and none in the year of disposal. The equipment was purchased on 1 January 2021 and is used in the factory. On 30 June 2021 one of the vehicles that cost $25,000 in 2019 was sold for $11,000. This transaction was not recorded in the ledger and the sale proceeds will not be received until August 2021. Depreciation of vehicles is to be charged to distribution costs and depreciation of buildings is to be share equally between cost of sales and administrative expenses. (2) The company's inventory at 30 June 2021 was valued at $56,000 and includes an item valued at $5,000, its usual cost price. However, this item was received free as part of a promotion campaign. (3) Accounts receivable include a debt of $5,000 that is to be written off. The allowance for doubtful accounts is to be adjusted to 5% of the accounts receivable at year end. (4) In January 2021 an interim dividend of $77,000 was paid. A final dividend of $55,000 was declared and authorized in June 2021. (5) The corporation tax liability for the year ended 30 June 2021 is estimated to be $94,000. (6) Long-term loan interest outstanding is to be accrued. (7) General administrative expenses include bank overdraft interest of $4,000. (8) The land of the company was professionally valued at $500,000 at 30 June 2021. This valuation should be incorporated into the financial statements. Ignore any tax effect. Required: Prepare the following financial statements for Alpha Ltd in accordance with the requirements of HKAS1: (a) a statement of profit or loss and other comprehensive income for the year ended 30 June 2021; (b) a statement of financial position as at 30 June 2021; and (20 marks) (22 marks) (c) a statement of changes in equity for the year ended 30 June 2021. (6 marks) Question 1 The following trial balance is extracted from the books of Alpha Ltd as at 30 June 2021. Dr Cr $000 $000 Inventory 1 July 2020 45 Sales 1,500 Rental income 28 Land at cost 330 Buildings - at cost 950 -accumulated depreciation 418 Vehicles at cost 150 - accumulated depreciation 5.4 54 Equipment Accounts receivable and payable General distribution costs General administrative expenses Director's fees 80 125 99 145 220 78 Dividend paid 77 Ordinary shares 220 Allowance for doubtful debts 12 Bank 18 Purchases 450 Retained earnings at 1 July 2020 196 10% Long term loan 110 Long term loan interest 5 2,655 2,655 The following additional information is available: (1) The company's depreciation policy is as follows: Buildings Vehicles 4% p.a. straight-line 20% p.a. reducing balance Equipment 20% p.a. straight-line In all cases, a full year's depreciation is charged in the year of acquisition and none in the year of disposal. The equipment was purchased on 1 January 2021 and is used in the factory. On 30 June 2021 one of the vehicles that cost $25,000 in 2019 was sold for $11,000. This transaction was not recorded in the ledger and the sale proceeds will not be received until August 2021. Depreciation of vehicles is to be charged to distribution costs and depreciation of buildings is to be share equally between cost of sales and administrative expenses. (2) The company's inventory at 30 June 2021 was valued at $56,000 and includes an item valued at $5,000, its usual cost price. However, this item was received free as part of a promotion campaign. (3) Accounts receivable include a debt of $5,000 that is to be written off. The allowance for doubtful accounts is to be adjusted to 5% of the accounts receivable at year end. (4) In January 2021 an interim dividend of $77,000 was paid. A final dividend of $55,000 was declared and authorized in June 2021. (5) The corporation tax liability for the year ended 30 June 2021 is estimated to be $94,000. (6) Long-term loan interest outstanding is to be accrued. (7) General administrative expenses include bank overdraft interest of $4,000. (8) The land of the company was professionally valued at $500,000 at 30 June 2021. This valuation should be incorporated into the financial statements. Ignore any tax effect. Required: Prepare the following financial statements for Alpha Ltd in accordance with the requirements of HKAS1: (a) a statement of profit or loss and other comprehensive income for the year ended 30 June 2021; (b) a statement of financial position as at 30 June 2021; and (20 marks) (22 marks) (c) a statement of changes in equity for the year ended 30 June 2021. (6 marks)