CL9BD Ltd.

20 marks

The following is the trail balance of CL9BD Ltd at 31 March 20X8:

BDT
Sales 1,150,000
Inventories at 1 April 20X7 75,000
Purchases 465,000
Distribution costs 220,000
Administrative expenses 340,000
Irrecoverable debts expense 36,000
Loan interest paid 8,000
Land and buildings cost 600,000
Plant and equipment cost 340,000
Land and buildings accumulated depreciation at 1 April 20X7 96,000
Plant and equipment cost accumulated depreciation at 1 April 20X7 63,000
Trade Receivables 60,000
Allowance for receivables 5,000
Bank 24,000
Equity share capital (BDT 1shares) 400,000
Share Premium 100,000
Bank Loan 200,000
Retained Earnings 61,000
Equity dividends paid 15,000
Trade Payables 54,000
Advance Deposit from customers 6,000
2,159,000 2,159,000

The following adjustments have yet to be accounted for:

1. CL9BD Ltd. Holds two lines of inventory at 31 March 20X8.

Details are as follows: BDT BDT
Item CX100 BY200
Total cost 16,200 76,000
Selling price 15,000 83,600

2. CL9BD Ltd. Paid an annual insurance premium of BDT 16,800 for the year 1 September 20X7 to 31
August 20X8. This payment is included in administrative expenses.

3. The company's depreciation is as follows:

Buildings Straight-line over 50 years
Plant and equipment 10% straight - line

The cost of the land was BDT 200,000 and all non-current assets are assumed to have zero residual
values.
There were no additions to or disposals of non-current assets during the year ended 31 March 20X8.
Depreciation on buildings is charged to administrative expenses, and depreciation on plant and
equipment is charged to cost of sales.

4. At the year end, trade receivables include a balance of BDT 4,800 which is considered irrecoverable.
The company wishes to adjust the allowance for receivables at 31 March 20X8 to BDT 2,760. The
company presents irrecoverable debts as other operating expenses on the face of the statement of
profit or loss.
5. The bank loan was received on 1 July 20X7 and is repayable in full in five years. Interest is charged at
a fixed rate of 8% per annum.

6. Income tax for the year ended 31 March 20X8 is estimated at BDT 10,000.

7. The Company products come with a six-month warranty. Management estimates that 5% of
warranties will be invoked, at a cost of BDT 15,000 to the Company. Provisions are charged to other
operating expenses.

8. The company paid rent of BDT 25,000 on 27 March 20X8 which covers the period 1 April 20X8 to 30
June 20X8. The amount has been included in administrative expenses.
Requirement
Prepare and present an income statement for CL9BD Ltd for the year ended 31 March 20X8 and a
balance sheet as at that date.