1. On 31 August 2023 the company had a 1 for 4 bonus issue of shares. Immediately...

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1. On 31 August 2023 the company had a 1 for 4 bonus issue of shares. Immediately prior to the issue, the ordinary share capital was £1,000,000. Shares have a nominal value of £0.50 per share and the market value on 31 August 2023 was £2.75 per share.

(a). On 3 October 2023 one of company’s customers was declared bankrupt and is expected to be able to settle its outstanding debts at a rate of 20p in the £1. On 30 September 2023, Sunnies plc had an outstanding balance of £140,000 due from this customer. Bad debts are classed as other expenses.
(b). On 15 October 2023 the company won a contract to supply sunglasses to the Royal Navy. This contract will generate revenue of £400,000 per year for the next 3 years.
(c). The company has recently launched a new brand of “indestructible” sunglasses. A special package comprising glasses and a 24 month optional, extended warranty, sells for £220. The warranty can be bought separately for £50 and the glasses, without warranty, for £200. During September 2023 the company sold 1,000 of these packages to cash customers.

Making reference to the relevant IAS or IFRS, explain the reasons for the accounting treatment you have used in a) above and outline any disclosure required for each of the transactions 1-4.

Using the proforma table provided, for each of the transactions 1-4, note the impact on the following elements of the financial statements of Sunnies plc.

Total profit as shown in the comprehensive income for the year ended 30 September 2023.
Total assets as at 30 September 2023
Total liabilities as at 30 September 2023

Total equity as at 30 September 2023

Required:

Prepare journal entries to record the above transactions in the financial statements of Sunnies plc for the year ended 30 September 2023, complying with all relevant IAS and IFRS.