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General Purpose Financial Statement
General Purpose Financial Statement
ABC Plc
Statement of profit or loss and other comprehensive income for the year ended
31 December 20X7
Revenue x
Cost of sales (x)
Gross profit x
Other income x
Distribution cost (x)
Administrative expenses (x)
Other expenses (x)
Finance cost (x)
Profit before tax x
Income tax (x)
Profit for the year x
Other comprehensive income:
Gains/(losses) on revaluation x
Gains/(losses) on foreign currency translation x
Actuarial gains/losses) on defined benefit pension plans x
Total comprehensive income X
Note 1:
Cost of sale can be derived by;
Opening inventory x
Purchases x
Add: Carriage inwards x
Less: Return inwards (x) x
x
Less: Closing stock (x)
X
Note 2:
The company’s net profit for the year is apportioned in three ways;
Pay tax
Pay dividends
Retained in the business for growth and expansion
ABC Plc
Statement of financial position as at 31 December 20x7
Assets
Non-current assets
Property, plant and equipment x
Goodwill x
Other intangible assets x
Investment in associates x
Total non-current assets x
Current asset
Non-current assets held for sale x
Inventories x
Trade receivables x
Cash and cash equivalents x
Total current assets x
Total assets (non-current assets and current assets) X
Illustration 1
The following information is extracted from Yami limited as at 31st December, 20X7
# #
Dr Cr
100,000 issued and fully paid ordinary share
Capital at #1 each 100,000
8% preference share at #1 each 50,000
10% debenture loan stock 30,000
Interest on debenture 3,000
Office expenses 47,000
Freehold land 200,000
Motor van at cost 15,000
Motor van accumulated depreciation
60,000
Motor van expenses 2,700
Purchases 220,000
Retained profit b/f 9,000
Revenue 300,000
Share premium 10,000
st
Inventory (1 January, 20X7)
20,000
Trade payable
50,000
Trade receivables 27,000
Dividend received 700
Dividend paid:- Equity 5,000
Preference 4,000
Investments 10,000
Bank 2,000
Additional information:
st
1. The inventory at 31 December was valued at #40,000 historical cost
2. Depreciation is charged at 20% per annum on cost of motor vehicle
3. Income tax for the period is estimated to be #10,000
4. The authorized share capital is:
150,000 equity shares of #1 each, and
75,000 preference shares of #1 each.
Required: Prepare Yami profit or loss account for the year ended 31st December 2oX7
and a statement of financial position as at that date.
Illustration 2
You have been asked to help prepare the financial statements of Tanhosier Ltd for the
year ended 31 March 2012. A trial balance as at 31 March is shown below:
$’000 $’000
Sales 50,332
Purchases 29,778
Property, plant and equipment - cost 59,088
Property, plant and equipment – accumulated depreciation 25,486
Inventories as at 1 April 2011 7, 865
Interest 200
Accruals 426
Distribution costs 8,985
Administrative expenses 7,039
Retained earnings 23,457
Trade receivables 9,045
Cash at bank 182
8% bank loan repayable 2015 5,000
Share capital 10,000
Share premium 5,000
Trade payables 2,481
122,182 122,182
Draft the statement of comprehensive income of Tanhosier Ltd for the year to 31 March
2012 and a statement of financial position at that date.
Illustration 3
The following trial balance has been extracted from the books of Walrus plc. as at 31
March 2012:
$’000 $’000
Land, at cost 120
Buildings, at cost 250
Equipment, at cost 196
Vehicles, at cost 284
Goodwill, at cost 300
Accumulated depreciation at 1 April 2011:
Buildings 90
Equipment 76
Vehicles 132
Inventory at 1 April 2011 107
Trade receivables and payables 183 117
Allowances for receivables 8
Bank balance 57
Corporation tax 6
Ordinary shares of $1 each 200
Retained earnings at 1 April 2011 503
Sales 1,432
Purchases 488
Director’s fees 150
Wages and salaries 276
General distribution costs 101
General administrative expenses 186
Dividend paid 20
Rents received 30
Disposal of vehicle 10
2,661 2,661
The following information is also available:
1. The company’s non-depreciable land was valued at $300,000 on 31 March
2012 and this valuation is to be incorporated into the accounts for the year to
31 March 2012.
2. The company’s depreciation policy is as follows:
Buildings 4% p.a. straight line
Equipment 40% p.a. reducing balance
Vehicles 25% p.a. straight line
In all cases, a full year’s depreciation is charged in the year of acquisition and
no depreciation is charged in the year of disposal. None of the assets had
been fully depreciated by 31 March 2011.
3. On 1 February 2012, a vehicle used entirely for administrative purposes was
sold for $10,000. The sale proceeds were banked and credited to a disposal
account but no other entries were made in relation to this disposal. The
vehicle had cost $44,000 in August 2008. This was the only disposal of a non-
current asset made during the year to 31 March 2012.
4. Depreciation was apportioned as follows:
Distribution costs Administrative expenses
Buildings 50% 50%
Equipment 25% 75%
Vehicles 70% 30%
5. The company’s inventory at 31 March 2012 is valued at $119,000.
6. Trade receivables include a debt of $8,000 which is to be written off. The
allowance for receivables is to be adjusted to 4% of the receivables which
remain after this debt has been written off.
7. Corporation tax for the year to 31 March 2011 was over-estimated by $6,000.
The corporation tax liability for the year to 31 March 2012 is estimated to be
$30,000.
8. One-quarter of wages and salaries were paid to distribution staff and the
remaining three-quarter were paid to administrative staff.
9. General administrative expenses include bank overdraft interest of $9,000
10. A dividend of 10p per ordinary share was paid on 31 December 2011. No
further dividends are proposed for the year to 31 March 2012.
Required:
Prepare the following financial statements for Walrus plc. in accordance with the
requirements of international standards:
a. A statement of profit or loss and other comprehensive income for the year to 31
March 2012
b. A statement of financial position as at 31 March 2012
c. A statement of changes in equity for the year to 31 March 2012.
Illustration 4
The following list of balances were extracted from the book of Mosafodo Plc as at 31st
December, 20X2.
$’000 $’000
250,000 Ordinary Share of $100 each 25,000
10% Long Term Loan 5,000
Share Premium 800
General Reserve 1,000
Retained Earnings (1st January,20X2) 250
Freehold Premises 15,000
Plant and machinery (cost $30,000,000) 18,000
Inventory 1st January 20X2 2,380
Purchase and sales 28,160 40,964
Return Inwards and outwards 1,030 1,735
Discount allowed and received 645 925
Trade Receivable/Payable 3,003 2,002
Allowance for bad debt 1/1/20X2 90
Wages and salaries 2,140
Internet and telephone 580
Interest on long term 300
Directors’ Fee 1,560
Insurance expense 200
Interim Dividends 800
Cash and bank balances 3,968
77,766 77,766
Additional Information
1. Inventory as at 31st December 20X2 was $2,728,000
2. During the year, goods worth $650,000 was lost to theft. No entry has been made
in the books to reflect this.
3. Insurance Prepaid was $20,000
4. During the year, a plant originally costing $5,000,000 and on which $3,000,000
depreciation had been provided for was sold for, has been sold at $2,200,000.
This transaction has been included as sales
5. Depreciation has been and is to be provided on plant and machinery at 10% of
cost.
6. Allowance for bad debt is to be increased to $250,000
7. The directors wish to provide for a final ordinary dividend of 5%
8. The freehold property was revalued at $16Million on 32, has been sold at
$2,200,000. This transaction has been included as sales
9. Depreciation has been and is to be provided on plant and machinery at 10% of
cost.
10. Allowance for bad debt is to be increased to $250,000
11. The directors wish to provide for a final ordinary dividend of 5%
12. The freehold property was revalued at $16Million on 31st December 20X2
13. The tax liability for the year is estimated at $1,000,000
Required: You are to prepare for the internal users, the statement of Profit or loss and
Other Comprehensive Income for the year ended 31st December 20X2.
Illustration 5
The following list of balances was extracted from the books of Efarabele Plc. as at 31st
December, 20X2
$’000 $’000
250,000 Ordinary Shares at $100 each 25,000
Share Premium 811
General Reserve 1,000
st
Retained Earnings 1 January, 20X2 250
10% long term loan 5,000
Land and building cost ($30,000,000) 18,000
Motor Vehicle cost ($25,000,000) 15,000
Inventory 1st January, 20X2 2,380
Purchase/Sales 28,160
40,964
Return inwards/Return outwards 1,030 1,735
Trade receivables/payable 3,638 2,927
st
Allowance for doubtful debt (1 January, 20X2) 90
Salary and wages 2,150
Internet and telephone 580
Interest on long term loan 300
Directors’ Fee 1,560
Officers insurance 100
Motor Vehicle insurance 130
Motor vehicle running cost 70
Interim Dividend 800
Cash and Bank balances 3,879
77,777 77,777
Additional information
st
i. Inventory as at 31 December, 20X2= $2,728,000
ii. Motor vehicle insurance prepaid= $20,000
iii. Half of the expenses on motor vehicle is on distribution of the company’s
product
iv. A motor vehicle costing $5,000,000 and on which #3,000,000 depreciation had
been provided was sold for $2,200,000 on the last day of the year. This
transaction has been included as sales
v. Depreciation is to be provided for motor vehicle at 20% of Reducing balance
vi. The cost of the building is $20,000,000 and depreciation has been and is to be
provided at 5% of cost
vii. The land was revalued at $12,000,000 on the 31st December, 20X2
viii. Allowance for bad debt is to be increased to #250,000
ix. 40% of salary and wages are paid to workers involved in distribution
x. The income tax of the year is estimated at $500,000
xi. The directors wish to provide for a final ordinary dividend of 5% and to transfer
$400,000 to General Reserve.
Required:
Prepare the statement of profit and loss and other comprehensive income for the
year ended 31st December, 20X2, a statement of change in equity for the year and a
statement of financial position for Efarabele Plc. as at 31st December, 20X2 in line
with requirements of International Financial Reporting Standards [IFRS].
(You should ignore notes to the statements).