The directors of Solar Bubble plc, a trading company, have asked the company’s chief accountant to prepare a draft income statement for the year ending 31 January 2013 in time for them to discuss it at their board meeting on 15th February. The directors prefer to have the information presented in the same way as in the annual financial statements.

The chief accountant identifies the following relevant balances;

Notes

1 £6000 has to be accrued in respect of sales commission for the year ending 31 January 2013.

2 The corporation tax charge for the year Is estimated at £60 625.

3 A preference dividend on the £10 000 8% preference shares was paid. The preference dividend is to be treated as a finance cost because the preference shares are treated as liability in the statement of financial position.

4 Of the administrative expenses, £1270 relates to prepayment of insurance.

The chief accountant will be using the following format for the draft income statement:

turnover

cost of sales

gross profit or loss

selling and distribution costs

administrative expenses

operating profit

finance costs

profit or loss before tax

tax on profit or loss

profit or loss for the year.

Required: prepare the draft income statement for Solar Bubble plc for the year ending 31 January 2013.
 

Transcribed Image Text:

Administrative expenses Opening inventory Interest payable 73 959 51 240 1 977 Revenue 975 420 Selling and distribution costs 80 714 Purchases 603 493 Closing inventory 57 210 Administrative expenses Opening inventory Interest payable 73 959 51 240 1 977 Revenue 975 420 Selling and distribution costs 80 714 Purchases 603 493 Closing inventory 57 210

Answer rating: 100% (QA)

The draft income statement of the solar bubble plc is as follows Note Accrue... View the full answer