Additional information

1. Inventories as at 31 December 2021 had a cost of 33,400 However, shortly after the year end these items included in this figure that were now considered out of date at a cost of £10,000 were sold for £8,000 and incurred additional selling costs of £1,000.

2. On 1 June 2021, Riverbank made a 1 for 4 Bonus issue (using the share premium account), this has correctly been accounted for in the figures above

3. A dividend of 80p per ordinary share was paid on 1 March 2021 on the correct number of shares in issue at that date. This was incorrectly debited to distribution costs.

4. Riverbank Ltd charges depreciation is yet to be charged and is as follows:  Buildings – straight line over 40 years charged to admin expenses  Plant and Machinery – 25% per annum reducing balance charged to cost of sales.5. On 31 December 2021 Directors made the decision to revalue Land and Buildings to its market rate of £600,000, this is yet to be accounted for in the trial balance.

5. On 31 December 2021 Directors made the decision to revalue Land and Buildings to its market rate of £600,000, this is yet to be accounted for in the trial balance.

6. After consultation with solicitors the legal provision is to be decreased by 40% at 31 December 2021, any change in provision is to be taken to admin expenses.

7. The acquired brand name had previously been assumed to have an infinite life. At 31 December directors has assessed it’s value in use terms of future cash flows is £200,000, and has an estimated market value if sold to a competitor of £180,000, any impairment is taken to cost of sales.

8. The final quarter of interest on the debenture has not been accounted for, the debenture is due to be settled on 31 December 2026.

9. The income tax charge for the year has been estimated as £75,000.

Requirement

Prepare a statement of profit or loss and other comprehensive income, and a statement of changes in equity for Riverbank Ltd for the year ended 31 December 2021 and a statement of financial position as at 31 December 2021, in a form suitable for publication.

Notes to the financial statements are not required, expenses should be presented analysed by function and ignore the tax effects of any adjustments.
 

Transcribed Image Text:

Riverbank Ltd has prepared the following trial balance at 31 December 2021 before taking account of the additional information below Ordinary share capital (£1 nominal value) Share premium account Retained earnings at 1 January 2021 Revenue Inventories at 1 January 2021 Purchases Administrative expenses Finance expenses Distribution costs Land and Buildings - Cost (£200,000 of which relates to land) Land and Buildings - Accumulated Depreciation at 1 January 2021 Plant and Machinery - Cost Plant and Machinery - Accumulated Depreciation at 1 January 2021 Trade receivables Trade payables Cash at bank Acquired Brand name 8% Debenture (repayable 2026) Legal Provision Debit £ 32,000 233,332 138,228 12,000 75,934 400,000 68,000 112,992 33,112 235,000 1,340,598 Credit £ 100,000 20,000 110,000 756,034 40,000 23,800 80,764 200,000 10,000 1,340,598 Riverbank Ltd has prepared the following trial balance at 31 December 2021 before taking account of the additional information below Ordinary share capital (£1 nominal value) Share premium account Retained earnings at 1 January 2021 Revenue Inventories at 1 January 2021 Purchases Administrative expenses Finance expenses Distribution costs Land and Buildings - Cost (£200,000 of which relates to land) Land and Buildings - Accumulated Depreciation at 1 January 2021 Plant and Machinery - Cost Plant and Machinery - Accumulated Depreciation at 1 January 2021 Trade receivables Trade payables Cash at bank Acquired Brand name 8% Debenture (repayable 2026) Legal Provision Debit £ 32,000 233,332 138,228 12,000 75,934 400,000 68,000 112,992 33,112 235,000 1,340,598 Credit £ 100,000 20,000 110,000 756,034 40,000 23,800 80,764 200,000 10,000 1,340,598

Answer rating: 100% (QA)

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