Gross profit 196,400

Selling and distribution cost 29,880

Administration expense 79,410
Interest 6,750
Imcome tax payable at 31 July 20x7 5000
Income tax paid 7610
Fixture and fittings – cost 246000
Motor 185000
Fixture and fittings – acc depreciation 68400
Motor – acc depreciation 50930
Inventories at 31 July 20x8 38560
Accounts receivable 43150
Allowance 3120
Bank 34120
Ordinary share capital (50p) 200000
Retain earnings 19960
Dividend paid 12000
10% debentures 90000
Account payable 16230
Suspense account 32440
1. Sales commission is paid monthly at 2% on sales in excess of $50000. Sale commission for July
20x8 has not been paid. July’s sales totalled $54550
2. ABC rents the premises where it operates. Rent is paid quarterly in advance on 1 January, April,
July and October each year. The annual rent was increased to $33000 from 1 April 20x8. No
adjustments have been made at 31 July 20x8 for rent prepaid or owing. Rent is included in
administrative expenses
3. On 1 August 20x7 ABC sold some fixtures for $15000. The received was posted to suspense
account. The fixtures had cost $40000 when purchased on 1 August 20x3. Any profit and loss on
disposal is to be presented on the face of the statement of profit or loss as other operating
income or expense.
4. Depreciation for the year ended 31 July 20x8 has not yet been accounted for. The company’s
depreciation policy is as follow:
Fixtures and fittings: 10% straight line
Motor: 30% reducing balance
5. Depreciation on fixtures and fittings is treated as administrative expense. Whilst depreciation on
motor is distribution cost.
6. ABC underestimated the income tax payable at 31 July 20x7 and paid the full amount due of
$7610 during the year ended 31 July 20x8. The company posted this payment to a separated
account in the nominal ledger. The income tax charge for the current year is estimated at $2500
7. The transaction report downloaded from the bank on 31 October 20x6 included a receipt of
$3840 which was not matched to a transaction. ABC posted the receipt to the suspense account.
It was later found that this was from a credit customer in full settlement of an invoice for $3920.
The customer had unexpectedly but correctly taken the cash discount
 8. ABC issued 10000 shares on 1 January 20x6 at a price of $1.36 each. The proceeds were credit to
the suspense account

Gross profit
Distribution cost
Administrative expense
Other operating expense / income
Profit/loss on operating
Finance cost
Profit/ loss before tax
Tax expense
Profit/ loss after tax

Non current asset

Plant and machinery
Motor
Current asset
Inventory
Trade and other receivable
Prepayment
Cash and cash equivalent
Total asset

Equity
Equity share cap
Preference share cap
Retain earnings
Non current liability
Debenture
Current liability
Trade payable
Accrual
Total equity and liaility