(a) Calculate the profit for the year ended 31 December 2019.

(b) Prepare the correct equity and liabilities section of the statement of financial position at 31 December 2019.  

Additional information The financial statements of PL plc also contain a value for goodwill.

(c) Explain the event which has taken place and caused the company to record the value for goodwill. 

(d) State two other reasons why goodwill might arise. [2]

 (e) Explain what is meant by the term ‘audit’.

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PL plc is a trading company. A trainee in the finance department made a start on preparing the financial statements for the year ended 31 December 2019. He produced the following statement, which contains errors. Statement of changes in equity for the year ended 31 December 2019 Ordinary Retained share capital earnings ($1 shares) $ 250 000 150 000 (20 000) (31000) Balance at 1 January 2019 Issue of new ordinary shares at $2.50 each Dividend paid 1 for 10 bonus issue of ordinary shares New five-year bank loan received Profit from operations for the year Loan interest paid Balance at 31 December 2019 349000 $ 76 000 31000 63 000 170 000 Bank loans $ 80000 25000 (12000) 93 000 PL plc is a trading company. A trainee in the finance department made a start on preparing the financial statements for the year ended 31 December 2019. He produced the following statement, which contains errors. Statement of changes in equity for the year ended 31 December 2019 Ordinary Retained share capital earnings ($1 shares) $ 250 000 150 000 (20 000) (31000) Balance at 1 January 2019 Issue of new ordinary shares at $2.50 each Dividend paid 1 for 10 bonus issue of ordinary shares New five-year bank loan received Profit from operations for the year Loan interest paid Balance at 31 December 2019 349000 $ 76 000 31000 63 000 170 000 Bank loans $ 80000 25000 (12000) 93 000

Answer rating: 100% (QA)

T Question a Ordinary shares issued 250 is 150000 Divideand Paid is 20000 Issued of ... View the full answer