1 Darth plc generated the following trial balance on 31 March 2016:Leasehold land & buildings at cost at 1 April 2015Fixtures & fittings at cost at 1 April 2015Vehicles at costAccumulated amortisation at 1 April 2015:- Leasehold land & buildingsAccumulated depreciation at 1 April 2015:- Fixtures & fittings- VehiclesBank loanBank loan interestDistribution and selling costsSalaries & wagesInventory at 1 April 2015PurchasesTrade receivablesTrade payablesProvision for doubtful debts1,500,000159,00085,000450,00081,09034,00050,0002,750313,600350,000119,5005,684,575485,785296,8301,500251,800Bank accountSalesLegal feesBad debtsAdministration costsOrdinary share capital at 1 April 2015Retained profit reserve at 1 April 2015General reserve at 1 April 2015Suspense account7,285,98532,50012,500225,295750,000285,400100,0002010 heve112,5009,334,8059,334,805The following information is also available:• The nominal value of each ordinary share is 50p. All the allotted share capitalhas been issued and fully paid up.Darth plc charges amortisation // depreciation as follows:Amortisation of leases over the lease period of 100 years on a straight linebasis,Depreciation of fixtures & fittings on a reducing balance basis at the rate of30%Depreciation of vehicles on a straight line basis over 5 years. The fleet ofvehicles is only used by the sales team.The leasehold land and buildings relate to both office buildings and warehousesin a ratio of 2:1, respectively.90% of the fixtures and fittings relate to the office buildings, and 10% to thewarehouses.The company initially valued its inventories held on 31 March 2016 at a historiccost of £180,000 but it was noted that, included within these inventories, wasdamaged stock acquired for £10,000 and only expected to sell for £7,000.per annum,Question 1 Continued on Page 2...1 Continuation of Question 1:A quarter of the salaries and wages is paid to the sales team and warehousestaff.It has been decided to increase the provision for doubtful debts by 20%.Included within distribution and selling costs is a figure of £3,000 which relatesto vehicle insurances for April and May 2016 of £3,000.Bad debts and changes to the provision for doubtful debts are treated as sellingand distribution expenses.The electricity use of the offices, included within Administrative expenses, forthe last month has not yet been accounted for, but it is estimated that the bill forMarch 2016 will be approximately £2,000.Based on the current year's results, corporation tax is estimated at £122,500and is to be provided for.The bank loan was taken out in 2013 and has an annual interest rate of 6%.The loan is repayable in its entirety in December 2018.The company paid interim dividends of 7½ pence per share on 1 November2015. The auditors discovered that the dividend payment was correctlyrecorded in the cash book, but had not been posted to the dividends paymentaccount. A final dividend of 15 pence per share is proposed.Due to the increasing price of Darth plc shares currently being traded, thecompany decided to make a bonus issue of 2:5 shares out of general reserveand then retained profit. This took place on 29 March 2016 and has not yetbeen recorded in the accounts.Audit fees of £75,000, due at 31 March 2016, have not been recorded.REQUIRED:(a) Construct a table showing the total of each individual non-trading expenseand the division of these expenses between the three headings ofadministrative costs, selling & distribution expenses and finance costs.Assume that all expenses are administrative costs unless clearly either selling& distribution expenses or finance costs, or stated as such.

Particulars Amount Total Amount Administrative Cost Amortization Expense for office…

1 Darth plc generated the following trial balance on 31 March 2016: Leasehold land & buildings at cost at 1 April 2015 Fixtures & fittings at cost at 1 April 2015 Vehicles at cost Accumulated amortisation at 1 April 2015: - Leasehold land & buildings Accumulated depreciation at 1 April 2015: - Fixtures & fittings - Vehicles Bank loan Bank loan interest Distribution and selling costs Salaries & wages Inventory at 1 April 2015 Purchases Trade receivables Trade payables Provision for doubtful debts Bank account Sales 1,500,000 159,000 85,000 450,000 81,090 34,000 50,000 2,750 313,600 350,000 119,500 5,684,575 485,785 296,830 1,500 251,800 7,285,985 Legal fees Bad debts Administration costs 32,500 12,500 225,295 Ordinary share capital at 1 April 2015 Retained profit reserve at 1 April 2015 General reserve at 1 April 2015 Suspense account 750,000 285,400 100,000 112,500 9,334,805 9,334,805 The following information is also available: • The nominal value of each ordinary share is 50p. All the allotted share capital has been issued and fully paid up. • Darth plc charges amortisation / depreciation as follows: Amortisation of leases over the lease period of 100 years on a straight line basis, - Depreciation of fixtures & fittings on a reducing balance basis at the rate of 30% per annum, Depreciation of vehicles on a straight line basis over 5 years. The fleet of vehicles is only used by the sales team. • The leasehold land and buildings relate to both office buildings and warehouses in a ratio of 2:1, respectively. • 90% of the fixtures and fittings relate to the office buildings, and 10% to the warehouses. The company initially valued its inventories held on 31 March 2016 at a historic cost of £180,000 but it was noted that, included within these inventories, was for 610.000 and only expected to sell for £7,000.

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q