SCHOOL OF BUSINESS

Subject : Principles of Financial Accounting

Code : ACC1014
Lecture : Accounting for Companies

Swansea Ltd prepared the unadjusted trial balance as at 30 June 2016:-

SWANSEA LTD
Unadjusted Trial Balance
as at 30 June 2016
Account Debit Credit
Share capital (700 000 shares fully paid) $ 700 000
General reserve 200 000
Retained earnings 110 400
Current tax liability 20 800
Accounts payable 50 300
Debentures 400 000
Bank overdraft (current) 30 700
Other liabilities (current) 30 300
Land $ 400 000
Buildings 620 000
Accum. depr. – buildings 100 000
Furniture and equipment 160 000
Accum. depr. – furniture and equipment 80 000
Delivery vehicles 60 400
Accum. depr. – delivery vehicles 20 000
Accounts receivable 60 600
Inventory (1 July 2015) 240 000
Investments 200 000
Prepaid insurance 10 000
Sales 530 600
Purchases 240 000
Sales returns and allowances 2 080
Purchases returns and allowances 2 000
Freight inwards 10 080
Freight outwards 9 060
Wages expense 100 500
Discount allowed 3 050
Discount received 3 020
Interest expense 10 140
Advertising expense 30 700
Income tax expense 20 800
Administrative expenses 100 710
$2 278 120 $2 278 120

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SCHOOL OF BUSINESS

The following information and events are yet to be recorded by the company on 30
June 2016.
i. Inventory on hand after a physical stocktake at 30 June 2016 amounted to
$265,000.
ii. Prepaid insurance at the end of the year amounted to $3,000.
iii. Wages accrued and unpaid were $1,700.
iv. Interest owing and unrecorded on debentures and bank overdraft was $15,000.
v. Depreciation to be recorded on delivery vehicles at the rate of 20% p.a., on
buildings at the rate of 5% p.a., and on furniture at the rate of 10% p.a. All
these assets have been on hand throughout the year.
vi. Interest due on investments amounted to $6,000.
vii. Credit sales made on the last day of the financial year but not recorded were
for $8,000.
viii. The directors have decided to transfer $20,000 to the general reserve from
retained earnings.
ix. The board of directors declared interim dividends of 5c per share on 1 st January
2016 and these dividends will be paid on 30 June 2016.

Required
A. Prepare a detailed income statement for Swansea Ltd for the year ended 30
June 2016.
B. Prepare the statement of changes in equity for Swansea Ltd for the year ended
30 June 2016.
C. Prepare the balance sheet for Swansea Ltd as at 30 June 2016.

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