Borgen Ltd prepared draft financial statements for the most recent year, which reported a profit for the year of £60,000. A subsequent check of the financial statements found the following errors: 1. Directors' salaries of £55,000 had been treated as rent payable. 2. Routine repairs to a machine for £4,000 had been added to the cost of the machine and had been depreciated at the rate of 25 per cent on cost. 3. A dividend paid of £10,000 had been reported as a dividend paid of £1,000. 4. A bad debt of £5,000 had not been recognised. The company pays corporation tax of 20 per cent on reported profits before tax. Required: What will be the profit for the year after the above errors have been corrected?
Borgen Ltd prepared draft financial statements for the most recent year, which reported a profit for the year of £60,000. A subsequent check of the financial statements found the following errors: 1. Directors' salaries of £55,000 had been treated as rent payable. 2. Routine repairs to a machine for £4,000 had been added to the cost of the machine and had been depreciated at the rate of 25 per cent on cost. 3. A dividend paid of £10,000 had been reported as a dividend paid of £1,000. 4. A bad debt of £5,000 had not been recognised. The company pays corporation tax of 20 per cent on reported profits before tax. Required: What will be the profit for the year after the above errors have been corrected?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Borgen Ltd prepared draft financial statements for the most recent year, which reported a profit for the year of £60,000. A subsequent check of the financial statements found the following errors:
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1.
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Directors' salaries of £55,000 had been treated as rent payable.
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2.
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Routine repairs to a machine for £4,000 had been added to the cost of the machine and had been
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|
3.
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A dividend paid of £10,000 had been reported as a dividend paid of £1,000.
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|
4.
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A
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The company pays corporation tax of 20 per cent on reported profits before tax.
Required:
What will be the profit for the year after the above errors have been corrected?
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