Following is Sierra Limited's trail balance for the year ended 31.12.2019 Equity shares Impairment loss Retained...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Following is Sierra Limited's trail balance for the year ended 31.12.2019 Equity shares Impairment loss Retained earnings at 1 January 2019 Property Plant and Equipment (PPE) - at cost Motor vehicles-at cost Accumulated depreciation of PPE at 1 January 2019 Accumulated depreciation of Motor vehicles at 1 January 2019 Inventory at 31 December 2019 Trade receivables Bank Trade payables Revenue Cost of sales Accrued Expenses Distribution costs Administrative expenses Tax for the year Provision for doubtful debts $'000 20,000 48,000 47,500 25,200 28,500 1,400 318,700 16,400 26,900 27,800 560,400 Increase in depreciation of $3,000 Increase in depreciation of $6,000 $'000 103,500 8,300 16,000 33,500 27,300 350,000 8,000 13,800 560,400 The following additional information has been highlighted in the working papers. 1. In the 2019 financial statements $13800 was recorded for doubtful debts instead of $1380. Investigations indicate it was an input error in processing the journal. 2. The company mistakenly used its depreciation policy of motor vehicles as diminishing value method instead of straight-line method in 2018. The impact of the change for the 2018 and 2019 financial years are: 31 December 2018 31 December 2019 Assume the amounts are material. 3. On 18 February 2020, the government announced tax changes which have may have the effect of increasing deferred tax liability by $200,000 as at 31 December 2019. 4. On 12 April 2019 a fire completely destroyed the company's factory and the inventory it contained. The carrying amounts of the factory and the inventory were $12 million and $16 million respectively. It appears that the company has not updated the value of its insurance cover. Sierra's trading operations have been severely disrupted since the fire and it expects large trading losses for some time to come. Required: 1. With reference to relevant accounting standard, briefly explain the accounting treatment for above four transactions. 2. Prepare the statement of profit or loss and other comprehensive income for Fresco for the year ended 31 December 2019. 3. Prepare the statement of changes in equity for Fresco for the year ended 31 December 2019. 4. Prepare the statement of financial position of Fresco as at 31 December 2019. Following is Sierra Limited's trail balance for the year ended 31.12.2019 Equity shares Impairment loss Retained earnings at 1 January 2019 Property Plant and Equipment (PPE) - at cost Motor vehicles-at cost Accumulated depreciation of PPE at 1 January 2019 Accumulated depreciation of Motor vehicles at 1 January 2019 Inventory at 31 December 2019 Trade receivables Bank Trade payables Revenue Cost of sales Accrued Expenses Distribution costs Administrative expenses Tax for the year Provision for doubtful debts $'000 20,000 48,000 47,500 25,200 28,500 1,400 318,700 16,400 26,900 27,800 560,400 Increase in depreciation of $3,000 Increase in depreciation of $6,000 $'000 103,500 8,300 16,000 33,500 27,300 350,000 8,000 13,800 560,400 The following additional information has been highlighted in the working papers. 1. In the 2019 financial statements $13800 was recorded for doubtful debts instead of $1380. Investigations indicate it was an input error in processing the journal. 2. The company mistakenly used its depreciation policy of motor vehicles as diminishing value method instead of straight-line method in 2018. The impact of the change for the 2018 and 2019 financial years are: 31 December 2018 31 December 2019 Assume the amounts are material. 3. On 18 February 2020, the government announced tax changes which have may have the effect of increasing deferred tax liability by $200,000 as at 31 December 2019. 4. On 12 April 2019 a fire completely destroyed the company's factory and the inventory it contained. The carrying amounts of the factory and the inventory were $12 million and $16 million respectively. It appears that the company has not updated the value of its insurance cover. Sierra's trading operations have been severely disrupted since the fire and it expects large trading losses for some time to come. Required: 1. With reference to relevant accounting standard, briefly explain the accounting treatment for above four transactions. 2. Prepare the statement of profit or loss and other comprehensive income for Fresco for the year ended 31 December 2019. 3. Prepare the statement of changes in equity for Fresco for the year ended 31 December 2019. 4. Prepare the statement of financial position of Fresco as at 31 December 2019.
Expert Answer:
Answer rating: 100% (QA)
Accounting Treatment for the Four Transactions Correction of Doubtful Debts Recording Error The correction of the input error for doubtful debts should be made by adjusting the provision for doubtful ... View the full answer
Related Book For
Financial Accounting an introduction to concepts, methods and uses
ISBN: 978-0324789003
13th Edition
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
Posted Date:
Students also viewed these accounting questions
-
4.2. Compute the transition probability matrix P(t) at t = 0.10 for a CTMC on S = {1,2,3, 4, 5, 6} with the rate matrix 0 6 0 0 0 0 0 0 6 0 0 0 0 0 0600 R = 0 0 0 0 0 6 0 0 0 0 6 0 0 0 0
-
The summarized statements for the year ended 31 December 2007 for Mat, Rug and P entities are as follows: Statements of comprehensive income for the year ended 31 December 2007 The following...
-
The income statement for Roberts Enterprises for the year ended June 30, 2009, is provided. Roberts Enterprises Income Statement For the Year Ended June 30, 2009 Sales revenue . . . . . . . . . . . ....
-
What type of isomers are exhibited by [Fe(en) 3 ]Cl 2 (en = ethane-1,2-diamine)? no isomers are possible. cis and trans isomers fac and mer isomers optical isomers
-
In a marketing research test, twenty-eight adult males were asked to shave one side of their face with one brand of razor blade and the other side with a second brand. They were to use the blades for...
-
Tennis Shoe Warehouse operates in a state with a 6.5% sales tax. For convenience, Tennis Shoe Warehouse credits Sales Revenue for the total amount (selling price plus sales tax) collected from each...
-
How many different prime factors does 10,241 have?
-
Samuel Aldrich started his own delivery service, Aldrich Service Inc., on June 1, 2012. The following transactions occurred during the month of June. June 1 Stockholders invested $15,000 cash in the...
-
Use the following table: Large stocks Small stocks Long-term corporate bonds Long-term government bonds U.S. Treasury bills. Inflation Average return 12.00% 16.70 6.35 6.10 3.95 3.10 a. Determine the...
-
Northern Tractor is a manufacturer of commercial and consumer garden tractors. In their 30 years of operation Northern has followed a traditional manufacturing process that included maintaining a...
-
One advantage of cycle counting is that it maintains accurate inventory records. True False
-
Investigate and discuss the economic impact of diversity in entrepreneurship. Consider how diverse businesses contribute to economic growth and address disparities in various communities. These are...
-
Does anything about Value Trust surprise you? Why or why not? Given the information in the case, would you invest in Value Trust in the fall of 2 0 0 5 ?
-
You have been told that a spherical cell is about 0.52 micrometers in diameter. How many nanometers would this be? Only put the number in your answer and NO units or any other information!
-
A small mining group is considering the purchase of a $1,786,713 continuous mining machine that will operate approximately 6,000 hours per year. The operational costs for the unit are estimated to be...
-
A firm reports $86,000 wages expense in its income statement. Beginning and ending wages payable are $3,900 and $2,800, respectively. What is the amount of cash paid to employees? Note: your answer...
-
property and liability insurance. ess you need to edit, it's safer to stay in Protected View. Enable Editing . 2 . . 3 . . .5 . . .10 [6 points] City Parking Garage (CPG) is insured under a Business...
-
On April 29, 2015, Auk Corporation acquires 100% of the outstanding stock of Amazon Corporation (E & P of $750,000) for $1.2 million. Amazon has assets with a fair market value of $1.4 million (basis...
-
Accounting for joint ventures. Smithfield Foods produces and processes beef, pork, and other meat products. It operates through 50/50 joint ventures with other consumer foods companies for sales in...
-
Classifying financial statement accounts The balance sheet or income statement classifies various items in one of the 1ollowng ways: CACurrent assets NANoncurrent assets CLCurrent liabilities...
-
Preparing a statement of cash flows. (Adapted from a problem prepared by Stephen A. Zeff.) Selected information from the accounting records of Breda Enterprises Inc. appears next. The firm uses a...
-
How could auditors have stopped Parmalat's deceptions?
-
In order to determine how risky a particular company is that you are auditing, you prepare these five ratios along with the same ratios of this company's peers: What are your thoughts about the risk...
-
You are provided the following information about a company for two years (in millions): a. Days Sales in receivable index b. Gross margin index c. Sales growth index Any thoughts about this company?...
Study smarter with the SolutionInn App