Question 5:

Bagio: Trial balance as at 31 March 20X3

$'000 $'000

Equity shares of 50 cents each 50,000

Share premium 20,000
Retained earnings at 1 April 20X2 11,200

Land and buildings – at cost (land $10 million) 60,000

Plant and equipment – at cost 94,500
Accumulated depreciation at 1 April 20X2 20,000
buildings
Accumulated depreciation at 1 April 20X2 plant 24,500
and equipment
Inventory at 31 March 20X3 43,700
Trade receivables 48,500
Bank 8,800

Trade payables 35,100

Revenue 694,400
Cost of sales 544,900
Distribution costs 21,500 R
Administrative expenses 30,900
Dividends paid 20,000

Using trial balance in question 1 and determine relevant items in financial statement based on
following information:
1. Revenue includes an amount of $20 million for cash sales made through the entity's retail
outlets during the year on behalf of its customer. The entity, acting as agent, is entitled to a
commission of 11% of the selling price of these goods. By 31 March 20X4, the entity had
paid to the customer $16 million (of the $20 million sales) and recorded this amount in cost of
sales.
2. The use life of the buildings at 1.4.20X2 was 20 years. (remaing useful life => ?)
3. Plant and equipment is depreciated at 20% per annum using the reducing balance method and
time apportioned as appropriate.
4. All depreciation is charged to administration expense, but none has yet been charged on any
non-current asset for the year ended 31 March 20X3.
5. At 1.5.20X4, the entity has sold 500 items A of inventory with net realisable value of $50
($90 => ?), these inventory has cost of $80 per unit (which is reflected on financial statement
at 31.12.20X3)

Required:
Correcting entries

Prepare profit and loss statement & B/S for the year ended 31/3/20x3