Coastal Trading Limited deals with farm equipment and machines throughout New Zealand. It is registered under...

   

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Coastal Trading Limited deals with farm equipment and machines throughout New Zealand. It is registered under the Companies Act 1993 with contributed equity comprising of 12,000,000 ordinary shares. Set out below is a list of balances extracted from the accounts of the company as at financial year end date 31st December 2013: Sales Purchases Inventory as at 1st January 2013 Rental Income Dividend Income Salaries and Wages Accounting fee Bank service charges Fines and penalties Entertainment expenses Distribution expenses Insurance Advertising and sales promotion Interest Expense on Long Term Loan Audit Fees Donation Directors' Fees Bank Buildings at cost Accumulated Depreciation - Building Plant & Equipment at cost Accumulated Depreciation - Plant & Equipment Vehicles at cost Accumulated Depreciation - Vehicles Land at fair value Revaluation Reserve - 1st January 2013 Investment in Shares at cost Accounts Receivable Allowance for Doubtful Debts Accounts Payable Debit $ 34,600,000 500,000 3,640,000 80,000 20,000 22,000 50,000 490,000 80,000 118,000 150,000 80,000 70,000 740,000 60,000 6,000,000 4,800,000 1,000,000 12,000,000 4,800,000 4,040,000 Credit $ 46,400,000 480,000 400,000 1,600,000 1,000,000 340,000 2,000,000 60,000 2,000,000 Long Term Loan Contributed Equity Treasury Stock Dividends paid Retained Earnings—1st January 2013 3. 4. 5. The following additional information is relevant for preparing financial statements for the year ended 31st December 2013: 1. Allowance for doubtful debts is to be made at a rate of 2% on the balance of accounts receivable outstanding as at 31st December 2013. Bad debts of $60,000 are to be written off. 2. Depreciation for the year ended 31st December 2013 is to be provided on the following basis: a. Land: No depreciation is to be provided. b. Buildings: 10% on cost. c. Plant and equipment: 10% reducing balance basis. d. Vehicles: Based on mileage. The total mileage expected from the vehicles is 1,800,000 kilometres. For the year ended 31st December 2013 the mileage used was 270,000 kilometres. 6. 7. 560,000 600,000 8. 74,500,000 3,000,000 16,580,000 640,000 74,500,000 Long term loan of $3,000,000 was outstanding as at 1st January 2013. Interest on the loan is payable at 10% per annum. An amount of $600,000 representing the principal component of the long term loan is due for repayment on 20th January 2014. Investment in shares comprises of shares available-for-sale $2,800,000 and shares held for trading $2,000,000. As at 31st December 2013, the market value of shares available-for-sale is $5,800,000 and market value of the shares held for trading is $4,200,000. These market values are considered to be the fair value of the shares. The cost of inventory as at 31st December 2013 is $400,000 and the net realisable value is $350,000 A professional valuation consultant re-valued land on 31st December 2013 at $8,000,000 using fair value. The revaluation reserve as at 1st January 2013 was in respect of revaluation on land in previous years. Building was re-valued for the first time. The new market value of the building as at 31st December 2013 is $4,500,000. The values of other non-current assets are as follows: 9. 10. 11. Vehicles Plant and Equipment As at 31st December 2013 Entertainment expenses Value In Use $400,000 $3,000,000 Net Selling price $350,000 $2,600,000 Tax for the period is $1,638,560. The contributed equity as at 31 December 2013 includes 1,000,000 ordinary shares issued in September 2013 at $3 per ordinary share. In the statement of comprehensive income the company classifies the following as other expenses: a. Bank service charges b. Fines and penalties c. REQUIRED: 1.1) Prepare the adjusting entries to take into account the additional information given. You do not need to prepare the closing journal entries and NO narrations are required. 1.2) Prepare the statement of profit and loss and other comprehensive income for the year ending 31 December 2013. 1.3) Prepare the statement of financial position as at 31 December 2013. Coastal Trading Limited deals with farm equipment and machines throughout New Zealand. It is registered under the Companies Act 1993 with contributed equity comprising of 12,000,000 ordinary shares. Set out below is a list of balances extracted from the accounts of the company as at financial year end date 31st December 2013: Sales Purchases Inventory as at 1st January 2013 Rental Income Dividend Income Salaries and Wages Accounting fee Bank service charges Fines and penalties Entertainment expenses Distribution expenses Insurance Advertising and sales promotion Interest Expense on Long Term Loan Audit Fees Donation Directors' Fees Bank Buildings at cost Accumulated Depreciation - Building Plant & Equipment at cost Accumulated Depreciation - Plant & Equipment Vehicles at cost Accumulated Depreciation - Vehicles Land at fair value Revaluation Reserve - 1st January 2013 Investment in Shares at cost Accounts Receivable Allowance for Doubtful Debts Accounts Payable Debit $ 34,600,000 500,000 3,640,000 80,000 20,000 22,000 50,000 490,000 80,000 118,000 150,000 80,000 70,000 740,000 60,000 6,000,000 4,800,000 1,000,000 12,000,000 4,800,000 4,040,000 Credit $ 46,400,000 480,000 400,000 1,600,000 1,000,000 340,000 2,000,000 60,000 2,000,000 Long Term Loan Contributed Equity Treasury Stock Dividends paid Retained Earnings—1st January 2013 3. 4. 5. The following additional information is relevant for preparing financial statements for the year ended 31st December 2013: 1. Allowance for doubtful debts is to be made at a rate of 2% on the balance of accounts receivable outstanding as at 31st December 2013. Bad debts of $60,000 are to be written off. 2. Depreciation for the year ended 31st December 2013 is to be provided on the following basis: a. Land: No depreciation is to be provided. b. Buildings: 10% on cost. c. Plant and equipment: 10% reducing balance basis. d. Vehicles: Based on mileage. The total mileage expected from the vehicles is 1,800,000 kilometres. For the year ended 31st December 2013 the mileage used was 270,000 kilometres. 6. 7. 560,000 600,000 8. 74,500,000 3,000,000 16,580,000 640,000 74,500,000 Long term loan of $3,000,000 was outstanding as at 1st January 2013. Interest on the loan is payable at 10% per annum. An amount of $600,000 representing the principal component of the long term loan is due for repayment on 20th January 2014. Investment in shares comprises of shares available-for-sale $2,800,000 and shares held for trading $2,000,000. As at 31st December 2013, the market value of shares available-for-sale is $5,800,000 and market value of the shares held for trading is $4,200,000. These market values are considered to be the fair value of the shares. The cost of inventory as at 31st December 2013 is $400,000 and the net realisable value is $350,000 A professional valuation consultant re-valued land on 31st December 2013 at $8,000,000 using fair value. The revaluation reserve as at 1st January 2013 was in respect of revaluation on land in previous years. Building was re-valued for the first time. The new market value of the building as at 31st December 2013 is $4,500,000. The values of other non-current assets are as follows: 9. 10. 11. Vehicles Plant and Equipment As at 31st December 2013 Entertainment expenses Value In Use $400,000 $3,000,000 Net Selling price $350,000 $2,600,000 Tax for the period is $1,638,560. The contributed equity as at 31 December 2013 includes 1,000,000 ordinary shares issued in September 2013 at $3 per ordinary share. In the statement of comprehensive income the company classifies the following as other expenses: a. Bank service charges b. Fines and penalties c. REQUIRED: 1.1) Prepare the adjusting entries to take into account the additional information given. You do not need to prepare the closing journal entries and NO narrations are required. 1.2) Prepare the statement of profit and loss and other comprehensive income for the year ending 31 December 2013. 1.3) Prepare the statement of financial position as at 31 December 2013.

Answer rating: 100% (QA)

Answer Answer a Date Particulars Dr Cr Bad Debts 40000 AC receivable 40000 Doubtful Debts 20000 Provision for Doubtful Debts 4040000 40000 x 260000 20... View the full answer