MGT6153: FINANCIAL ACCOUNTING & FINANCIAL STATEMENTS ANALYSIS 2022
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MGT6153:
FINANCIAL ACCOUNTING & FINANCIAL STATEMENTS ANALYSIS
2022
Section A:
COMPULSORY QUESTION (You MUST answer this question)
Question A
The following trial balance has been prepared from the books of Apple plc at 31
December 2021.
|
|
£ |
£ |
|
Bank |
102,000 |
|
|
Trade receivables |
214,000 |
|
|
Provision for doubtful debts at 1 Jan 2021 |
|
1,800 |
|
Inventory |
90,800 |
|
|
Land at cost |
260,000 |
|
|
Buildings at cost |
380,000 |
|
|
Accumulated depreciation at 1 Jan 2021 - Buildings |
|
120,000 |
|
Equipment at cost |
160,000 |
|
|
Accumulated depreciation at 1 Jan 2021 - Equipment |
|
57,600 |
|
Trade payables |
|
109,200 |
|
10% debentures |
|
200,000 |
|
Debenture interest |
15,000 |
|
|
Ordinary shares (£10 par) |
|
120,000 |
|
Share premium |
|
24,000 |
|
Retained earnings as at 1 Jan 2021 |
|
300,200 |
|
Revenue |
|
2,280,000 |
|
Cost of Sales |
1,600,000 |
|
|
Selling and Distribution expense |
156,000 |
|
|
Administrative expenses |
235,000 |
|
|
|
3,212,800 |
3,212,800 |
The following additional information which relates to the financial year ended 31 December 2021 has not been recorded in the trial balance and needs to be adjusted for in preparing the financial statements of the company:
• Bad debts of £10,000 are to be written off. The company’s policy is to classify Bad debts as administrative expense.
• Apple plc estimates that provision for doubtful debts at the year-end is 10% of the Trade receivables.
• Buildings are to be depreciated using the straight-line method over 30 years, and the residual value is £20,000. The equipment is to be depreciated using the straight-line method over 10 years, and the residual value is £16,000. Both buildings and equipment are used for the distribution function.
• The 10% debentures pay interest quarterly at 1st April, 1st July, 1st October and 1st January, respectively. The interest for the last quarter of the financial year ended 31 December 2021 has not been paid or recorded.
• In November 2021, Apple plc issued 4,000 6% preference shares with a par value of £20 per share for £80,000, and 4,000 ordinary shares for £92,000. Transactions relating to the issue of shares have not been recorded in any account of Apple’s books.
• On 31 December 2021, Apple plc declared the annual cash dividend on the preference shares and a £1.50 per share dividend on the ordinary shares, all payable on 15 January 2022.
• Corporate tax for the year ended 31 December 2021 is estimated to be £26,000.
Required:
For Apple plc, prepare the following financial statements in accordance with IAS 1:
a) Statement of Comprehensive Income for the year ended 31 December 2021;
b) Statement of Financial Position as at 31 December 2021;
c) Statement of Changes in Equity for the year ended 31 December 2021.
(Total 40 Marks)
Section B
ANSWER ONLY TWO FROM FOUR QUESTIONS
Question B1
Banana plc has prepared the following comparative statements of financial position for the years ended 31 December 2020 and 2021:
Statements of Financial Position as at 31 December
|
|
2021 £000 |
2020 £000 |
|
Non-current assets: |
|
|
|
Buildings at net book value |
153,000 |
174,000 |
|
Equipment at cost |
960,000 |
1,050,000 |
|
Accumulated depreciation – Equipment |
(250,000) |
(375,000) |
|
Total Non-current assets |
863,000 |
849,000 |
|
|
|
|
|
Current assets: |
|
|
|
Inventory |
150,000 |
180,000 |
|
Trade receivables |
159,000 |
117,000 |
|
Prepaid expenses |
18,000 |
27,000 |
|
Bank |
447,000 |
153,000 |
|
Total current assets |
774,000 |
477,000 |
|
|
|
|
|
Total assets |
1,637,000 |
1,326,000 |
|
|
|
|
|
Current liabilities: |
|
|
|
Trade payables |
153,000 |
168,000 |
|
Taxation |
60,000 |
42,000 |
|
Total current liabilities |
213,000 |
210,000 |
|
|
|
|
|
Non-current Liabilities: |
|
|
|
Debentures |
— |
450,000 |
|
|
|
|
|
Equity: |
|
|
|
Ordinary Shares of £1 each |
1,245,000 |
600,000 |
|
Retained Earnings |
179,000 |
66,000 |
|
Total Equity |
1,424,000 |
666,000 |
|
|
|
|
|
Total liabilities and equity |
1,637,000 |
1,326,000 |
2022-08-08