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A) Prepare a statement of comprehensive income for the year ended 31 December  2019 for ABC. B) Prepare a statement of changes in equity for ABC, for the year ended 31 December  2019.

A) Prepare a statement of comprehensive income for the year ended 31 December  2019 for ABC. B) Prepare a statement of changes in equity for ABC, for the year ended 31 December  2019.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A) Prepare a statement of comprehensive income for the year ended 31 December 
2019 for ABC.

B) Prepare a statement of changes in equity for ABC, for the year ended 31 December 
2019. 

The following information is relevant. 1. Closing inventory at 31 December 2019 is £45,000 2. On further investigation of the suspense account in the trial balance above, it was discovered that: 3 5. 6 7 8 9 10 An expense of £8,250 for legal services stationery had been posted to the suspense account and a cash receipt of £15,750 had been posted to the suspense account. This represented the disposal proceeds from selling equipment, which had been purchased on 1 March 2016 at a cost of £48,000. ABC depreciates non-current assets as follows: buildings at 1 per cent on a straight-line basis plant and equipment at 10 per cent on a straight-line basis motor vehicles at 20 per cent on a reducing balance basis. There are no non-current assets that have a residual value. No depreciation for the year ended 2018 has been entered into the accounting records. A full year's depreciation is charged in the year of acquisition and in the year of disposal. Depreciation expense for the year is included in administration expenses. At 31 December 2019, ABC's directors decided to revalue the buildings to £1,350,000. No entries have been made in the nominal ledger accounts. Post trial balance reconciliations showed that an invoice for £54,000 for insurance for the period from 1 October 2019 to 30 September 2020 had been paid and debited to the insurance account. Insurance costs are included in administration expenses. A full year's debenture interest is to be accrued. At 31 December 2019, ABC decided to write off a trade receivable of £2,400 and to make an allowance for irrecoverable receivables of 10 per cent of the outstanding receivables at that date. No entries have been made in the nominal ledger accounts. No heat and lighting costs for the months of November and December 2019 have been recorded in the accounting records. The next quarter's invoice for heat and lighting is expected to be £36,000. Heat and lighting costs are included in administration expenses. For the financial year ended 31 December 2019, corporation tax is estimated to be £222,000 and the audit fee is estimated to be £180,000. ABC is proposing a final dividend of 2 pence per share.
Transcribed Image Text:The following information is relevant. 1. Closing inventory at 31 December 2019 is £45,000 2. On further investigation of the suspense account in the trial balance above, it was discovered that: 3 5. 6 7 8 9 10 An expense of £8,250 for legal services stationery had been posted to the suspense account and a cash receipt of £15,750 had been posted to the suspense account. This represented the disposal proceeds from selling equipment, which had been purchased on 1 March 2016 at a cost of £48,000. ABC depreciates non-current assets as follows: buildings at 1 per cent on a straight-line basis plant and equipment at 10 per cent on a straight-line basis motor vehicles at 20 per cent on a reducing balance basis. There are no non-current assets that have a residual value. No depreciation for the year ended 2018 has been entered into the accounting records. A full year's depreciation is charged in the year of acquisition and in the year of disposal. Depreciation expense for the year is included in administration expenses. At 31 December 2019, ABC's directors decided to revalue the buildings to £1,350,000. No entries have been made in the nominal ledger accounts. Post trial balance reconciliations showed that an invoice for £54,000 for insurance for the period from 1 October 2019 to 30 September 2020 had been paid and debited to the insurance account. Insurance costs are included in administration expenses. A full year's debenture interest is to be accrued. At 31 December 2019, ABC decided to write off a trade receivable of £2,400 and to make an allowance for irrecoverable receivables of 10 per cent of the outstanding receivables at that date. No entries have been made in the nominal ledger accounts. No heat and lighting costs for the months of November and December 2019 have been recorded in the accounting records. The next quarter's invoice for heat and lighting is expected to be £36,000. Heat and lighting costs are included in administration expenses. For the financial year ended 31 December 2019, corporation tax is estimated to be £222,000 and the audit fee is estimated to be £180,000. ABC is proposing a final dividend of 2 pence per share.
Below is the list of nominal ledger balances of ABC Company at 31 December 2019. ABC's financial year end is at 31 December. Nominal ledger closing balances at 31 December 2019 Ordinary shares £1 8% £0.50 preference shares 10% Debentures Retained earnings Interim ordinary dividend - paid Preference dividends -paid Land Buildings Accumulated depreciation on buildings Plant and equipment at cost Accumulated depreciation on plant and equipment Motor vehicles at cost Accumulated depreciation on motor vehicles Inventory as at 1 January 2019 Receivables Payables Bank Sales Purchases Administration expenses Distribution costs Suspense account (credit balance) Allowance for receivables £ 300,000 150,000 90,000 438,120 3,000 6,000 150,000 1,200,000 120,000 540,000 216,000 345,000 124,200 52,500 48,900 57,000 28,500 3,450,000 2,016,000 162,000 409,920 7,500 9,000
Transcribed Image Text:Below is the list of nominal ledger balances of ABC Company at 31 December 2019. ABC's financial year end is at 31 December. Nominal ledger closing balances at 31 December 2019 Ordinary shares £1 8% £0.50 preference shares 10% Debentures Retained earnings Interim ordinary dividend - paid Preference dividends -paid Land Buildings Accumulated depreciation on buildings Plant and equipment at cost Accumulated depreciation on plant and equipment Motor vehicles at cost Accumulated depreciation on motor vehicles Inventory as at 1 January 2019 Receivables Payables Bank Sales Purchases Administration expenses Distribution costs Suspense account (credit balance) Allowance for receivables £ 300,000 150,000 90,000 438,120 3,000 6,000 150,000 1,200,000 120,000 540,000 216,000 345,000 124,200 52,500 48,900 57,000 28,500 3,450,000 2,016,000 162,000 409,920 7,500 9,000
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