Understanding and preparing financial statements for single-entity limited companies.

 

The following is the trial balance of Minxiama Ltd at 31 December 2022.

Minxiama Ltd
Trial balance at 31 December 2022
Sales				3,790,000
Other operating income				125,000
Inventory at 1 January 2022		834,000
Purchases		1,099,500
Administrative expenses		396,000
Distribution costs		225,000
Salaries		715,500
Insurance expenses		46,000
Marketing expenses		410,000
Energy costs		24,000
Equipment - cost		900,000
Equipment - accumulated depreciation				270,000
Vehicles - cost		400,000
Vehicles - accumulated depreciation				80,000
Non-current investments		57,000
Receivables		820,000
Allowance for receivables				30,000
Payables				565,000
Bank		497,000
Ordinary shares (nominal value 1)				880,000
Ordinary share premium				110,000
Retained earnings at 1 January 2022				285,000
5% debentures				300,000
Interim ordinary dividend paid		11,000
Total		Total6,435,000		Total6,435,000

The following information is relevant:

2. Closing inventory at 31 December 2022 is 625,000.
4. Minxiama Ltd depreciates non-current assets as follows:
   • Equipment at 15% per annum on a straight line basis
   • Vehicles at 20% per annum on a reducing balance basis.
7. On 31December 2022, Minxiama Ltd decided to write off receivables of 22,000 and to make an allowance for irrecoverable receivables of 3% of net receivables at that date. No entries have been made in the accounting records.
9. A full year's interest on the debentures is to be accrued.
11. Energy costs have been paid up to 31October 2022. The next invoice covering the period 1November2022 to 31January 2023 is expected to be 8,400.
13. On 1August 2022, Minxiama Ltd had paid 34,000 for insurance to cover the period 1August 2022 to 31January 2023
15. For the financial year ended 31 December 2022, the audit fee is estimated to be 32,000 and corporation tax is estimated to be 135,750.
17. Minxiama Ltd allocates expenses as follows:
    • Depreciation on vehicles is to be allocated to distribution costs.
    • Depreciation on equipment is to be allocated to administrative expenses.
    • Salaries and energy expenses are to be allocated 80% to administrative expenses and 20% to distribution costs.
    • All other expenses are to be allocated to administrative expenses.

Required

• b.Make a statement of changes in equity for Minxiama Ltd for the year ended 31 December 2022. clearly show all your workings.

• c.Make a statement of financial position for Minxiama Ltd as at 31 December 2022. clearly show all your workings.

• d. Using the numbers from Minxiama Ltd to illustrate, explain the purposes of the statement of changes in equity.

Answer rating: 100% (QA)

b Statement of Changes in Equity for Minxiama Ltd for the year ended 31 December 2022 Ordinary Shares Ordinary Share Premium Retained Earnings Total Equity Balance at 1 January 2022 880000 110000 2850... View the full answer