The year-end Trial Balance was extracted from the books of Sparrow Ltd as shown. You are informed
Question:
The year-end Trial Balance was extracted from the books of Sparrow Ltd as shown.
You are informed as follows:
(a) Included within sales are goods invoiced at £16,000 in respect of which the customers have the option to return until a week after the year-end. These goods were invoiced at cost plus a third.
(b) Cost of inventory held as at 30 September 2011 was £385,000.
(c) A portion of the shop premises has been let out, at £3,000 per month, since 2007.
(d) Buildings are depreciated at 2% of cost per annum assuming that a quarter of the cost related to land which is not depreciated. Directors wish to report land and buildings at their current value which was identified, as at 1 October 2010, as £1 million for land and £1.6 million for the buildings.
(e) New machinery was acquired for £80,000 on 1 April 2011. Machinery is depreciated at 10% per annum using the reducing balance method.
(f) Equipment acquired on 1 October 2008 is depreciated using the sum of the years’ digits method over five years.
(g) Tax on current year’s profit is estimated at £79,000. Deferred tax needs to be accounted for at 20% of taxable temporary difference which, as at 30 September 2011, is identified at an amount of £180,000.
Required:
Prepare for publication the Statement of income for the year ended 30 September 2011 and the Statement of financial position as at that date.
Step by Step Answer:
Financial Accounting An Introduction
ISBN: 9780273737650
2nd Edition
Authors: Mr Barry Elliott, Mr Augustine Benedict