On 25 March 2019, Sun Store Limited acquired a hundred percent of the share capital of...
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On 25 March 2019, Sun Store Limited acquired a hundred percent of the share capital of Moon Store Limited. On the day of acquisition the shareholder equity of Moon Store Limited consists of: Contributed Capital of $3,240,000; Retained Earnings of $1,980,000 and Revaluation Reserve of $270,000. Sun Store Limited remained the sole owner of Moon Store Limited as at 31st March 2022. During the financial year ended 31st March 2022, Moon Store Limited sold inventory to Sun Store Limited for $540,000. Moon Store Limited had always sold goods to Sun Store Limited at 25% on cost. The inventory of Sun Store Limited as at 31 March 2022 consists of inventory amounting to $435,600 that was purchased from Moon Store Limited. Of the inventory Sun Store Limited had on hand at 1st April 2021, $118,800 was purchased from Moon Store Limited. During the financial year ended 31st March 2022, Sun Store Limited sold inventory to Moon Store Limited for $342,000. Sun Store Limited had always sold goods to Moon Store Limited at 19% on cost. The inventory of Moon Store Limited as at 31st March 2022 consists of inventory amounting to $238,000 that was purchased from Sun Store Limited. Of the inventory Moon Store Limited had on hand at 1st April 2021, $57,120 was purchased from Sun Store Limited. Interim dividends paid by Moon Store Limited for year ended 31st March 2022 amounted to $180,000. On 31st March 2022 the directors of Moon Store Limited declared a final dividend of $108,000. The final dividend has been accounted for in the books of Sun Store Limited and Moon Store Limited. Assume tax rate of 28 per cent. The financial statements of Sun Store Limited and Moon Store Limited for the year ended and as at 31st March 2022 are provided below: Revenue Cost of Goods Sold Opening Stock Purchases Closing Stock Gross profit Other income and gains Total Income Administration expenses Sun Store Limited S (A 14,400,000 540,000 3,600,000 -720,000 3,420,000 10,980,000 630,000 11,610,000 -3,060,000 Moon Store Limited S 5,400,000 90,000 1,260,000 -54,000 1.296,000 4,104,000 180,000 4,284,000 -900,000 Gross profit Other income and gains Total Income Administration expenses Marketing and distribution expenses Operating profit Finance costs Profit before tax Taxation Profit for the year Other comprehensive income: 3,420,000 10,980,000 630,000 11,610,000 -3,060,000 -2,160,000 6,390,000 -450,000 5,940,000 -324,000 5,616,000 1,296,000 4,104,000 180,000 4,284,000 -900,000 -540,000 2,844,000 -162,000 2,682,000 -72,000 2,610,000 Fair Value Reserve Revaluation Reserve Other comprehensive income for the year Total comprehensive income for the year Assets Non-current assets Property, plant and equipment Investment in Moon Store Limited. Sun Store Limited Balance Sheet as at 31st March 2022 S 12,060,000 100,800 5,400,000 2,880,000 2,980,800 8,596,800 Moon Store Limited S 90,000 7,560,000 -39,600 2,660,400 50,400 Investment in Equity Instruments Total non-current assets Current assets Inventories Accounts receivable Dividends receivable Financial assets held for trading Cash and cash equivalents Total current assets Total assets Liabilities Non-current liabilities 360,000 17,820,000 720,000 792,000 126,000 1,080,000 133,200 2,851,200 20,671,200 540,000 8,100,000 54,000 270,000 72,000 1,260,000 468,000 2,124,000 10,224,000 Long-term liabilities Total non-current liabilities Current liabilities Accounts Payable Dividends payable Taxation payable Total current liabilities Total liabilities Net assets Equity 3,960,000 3,960,000 414,000 270,000 324,000 1,008,000 4.968,000 15,703,200 1,386,000 1,386,000 144,000 108,000 72,000 324,000 1,710,000 8,514,000 Contributed Equity (Ordinary shares) Revaluation reserve Fair Value Reserve Retained Earnings Question 2 continued Additional Notes: I. II. III. IV. V. 6,300,000 3,240,000 403,200 5,760,000 15,703,200 3,240,000 180,000 144,000 4,950,000 8,514,000 Included in other incomes and gains of Sun Store Limited are management fees of $100,800 received from Moon Store Limited Included in the Administration expenses of Moon Store limited is management fees of $100,800 paid to Sun Store Limited Included in the accounts receivable of Moon Store Limited is an amount of $45,000 due from Sun Store Limited. Included in the accounts payable of Sun Store Limited is an amount of $45,000 due to Moon Store Limited Included in the accounts receivable of Sun Store Limited is an amount of $80,000 due from Moon Store Limited. VI. VII. Included in the accounts payable of Moon Store Limited is an amount of $80,000 due to Sun Store Limited During the year ended 31 March 2022, Sun Store Limited paid interim dividend of $270,000 and declared final dividend of $270,000. Required: (a) Prepare notional journal entries to consolidate the financial statements of Sun Store Limited and its wholly owned subsidiary Moon Store Limited (with narrations) for the year ended 31 March 2022 (15 marks) (b) b) Prepare a work sheet to show the consolidation of the statements of comprehensive income for the year ended 31 March 2022 and the Balance Sheets as at 31 March 2022 of Sun Store Limited and its wholly owned subsidiary Moon Store Limited (10 marks) On 25 March 2019, Sun Store Limited acquired a hundred percent of the share capital of Moon Store Limited. On the day of acquisition the shareholder equity of Moon Store Limited consists of: Contributed Capital of $3,240,000; Retained Earnings of $1,980,000 and Revaluation Reserve of $270,000. Sun Store Limited remained the sole owner of Moon Store Limited as at 31st March 2022. During the financial year ended 31st March 2022, Moon Store Limited sold inventory to Sun Store Limited for $540,000. Moon Store Limited had always sold goods to Sun Store Limited at 25% on cost. The inventory of Sun Store Limited as at 31 March 2022 consists of inventory amounting to $435,600 that was purchased from Moon Store Limited. Of the inventory Sun Store Limited had on hand at 1st April 2021, $118,800 was purchased from Moon Store Limited. During the financial year ended 31st March 2022, Sun Store Limited sold inventory to Moon Store Limited for $342,000. Sun Store Limited had always sold goods to Moon Store Limited at 19% on cost. The inventory of Moon Store Limited as at 31st March 2022 consists of inventory amounting to $238,000 that was purchased from Sun Store Limited. Of the inventory Moon Store Limited had on hand at 1st April 2021, $57,120 was purchased from Sun Store Limited. Interim dividends paid by Moon Store Limited for year ended 31st March 2022 amounted to $180,000. On 31st March 2022 the directors of Moon Store Limited declared a final dividend of $108,000. The final dividend has been accounted for in the books of Sun Store Limited and Moon Store Limited. Assume tax rate of 28 per cent. The financial statements of Sun Store Limited and Moon Store Limited for the year ended and as at 31st March 2022 are provided below: Revenue Cost of Goods Sold Opening Stock Purchases Closing Stock Gross profit Other income and gains Total Income Administration expenses Sun Store Limited S (A 14,400,000 540,000 3,600,000 -720,000 3,420,000 10,980,000 630,000 11,610,000 -3,060,000 Moon Store Limited S 5,400,000 90,000 1,260,000 -54,000 1.296,000 4,104,000 180,000 4,284,000 -900,000 Gross profit Other income and gains Total Income Administration expenses Marketing and distribution expenses Operating profit Finance costs Profit before tax Taxation Profit for the year Other comprehensive income: 3,420,000 10,980,000 630,000 11,610,000 -3,060,000 -2,160,000 6,390,000 -450,000 5,940,000 -324,000 5,616,000 1,296,000 4,104,000 180,000 4,284,000 -900,000 -540,000 2,844,000 -162,000 2,682,000 -72,000 2,610,000 Fair Value Reserve Revaluation Reserve Other comprehensive income for the year Total comprehensive income for the year Assets Non-current assets Property, plant and equipment Investment in Moon Store Limited. Sun Store Limited Balance Sheet as at 31st March 2022 S 12,060,000 100,800 5,400,000 2,880,000 2,980,800 8,596,800 Moon Store Limited S 90,000 7,560,000 -39,600 2,660,400 50,400 Investment in Equity Instruments Total non-current assets Current assets Inventories Accounts receivable Dividends receivable Financial assets held for trading Cash and cash equivalents Total current assets Total assets Liabilities Non-current liabilities 360,000 17,820,000 720,000 792,000 126,000 1,080,000 133,200 2,851,200 20,671,200 540,000 8,100,000 54,000 270,000 72,000 1,260,000 468,000 2,124,000 10,224,000 Long-term liabilities Total non-current liabilities Current liabilities Accounts Payable Dividends payable Taxation payable Total current liabilities Total liabilities Net assets Equity 3,960,000 3,960,000 414,000 270,000 324,000 1,008,000 4.968,000 15,703,200 1,386,000 1,386,000 144,000 108,000 72,000 324,000 1,710,000 8,514,000 Contributed Equity (Ordinary shares) Revaluation reserve Fair Value Reserve Retained Earnings Question 2 continued Additional Notes: I. II. III. IV. V. 6,300,000 3,240,000 403,200 5,760,000 15,703,200 3,240,000 180,000 144,000 4,950,000 8,514,000 Included in other incomes and gains of Sun Store Limited are management fees of $100,800 received from Moon Store Limited Included in the Administration expenses of Moon Store limited is management fees of $100,800 paid to Sun Store Limited Included in the accounts receivable of Moon Store Limited is an amount of $45,000 due from Sun Store Limited. Included in the accounts payable of Sun Store Limited is an amount of $45,000 due to Moon Store Limited Included in the accounts receivable of Sun Store Limited is an amount of $80,000 due from Moon Store Limited. VI. VII. Included in the accounts payable of Moon Store Limited is an amount of $80,000 due to Sun Store Limited During the year ended 31 March 2022, Sun Store Limited paid interim dividend of $270,000 and declared final dividend of $270,000. Required: (a) Prepare notional journal entries to consolidate the financial statements of Sun Store Limited and its wholly owned subsidiary Moon Store Limited (with narrations) for the year ended 31 March 2022 (15 marks) (b) b) Prepare a work sheet to show the consolidation of the statements of comprehensive income for the year ended 31 March 2022 and the Balance Sheets as at 31 March 2022 of Sun Store Limited and its wholly owned subsidiary Moon Store Limited (10 marks)
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