Creditors Sales Revenue 22,500 1,143,700 Land at cost 550,000 Building at cost 570,000 Furniture and fittings at cost 85,000 Bank 14,000 Provision for Depreciation Buildings 120,000 Furniture and fittings 15,000 Discounts 5,700 5,800 Retained Earnings at 1 Oct 2022 14,800 Provision for bad debts 2,200 Goodwill 400,000 Cash 16,400 Inventory at 1 Oct 2022 48,000 Rent Received(from Breezy Ltd) 27,000 Rent 7,900 Wages and Salaries 122,000 Insurance 16,300 Carriage Inwards 2,300 Returns 8,500 12,000 Commission received 5,200 8% Mortgage 100,000 Other Operating Expenses 2,500 Debtors 45,000 Purchases 340,000 Debenture Interest 1,200 Mortgage Interest 4,600 Bad debt 4,700 7% Debentures 150,000 4% Preference Shares @ $0.5 130,000 Ordinary Shares @ $0.75 375,000 General Reserves 127,000 Interim ordinary dividends paid 4,500 2,249,400 2,249,400 The following additional information is available: 1. At September 30, 2023 closing inventory was $32,000 2. The Accountant has determined that the estimate for the provision for bad debts at September 30, 2023 is 10% of debtors. 3. 4. 5. At the end of the period it was discovered that one employee was owed $2,000 in salaries while another was overpaid by $4,000. Additionally insurance prepaid was $300 The following appropriation of the expenses must be made Rent Wages & Salaries Insurance Prov. for Depreciation Admin 80% 60% 50% 70% Selling & Dist 20% 40% 50% 30% On June 1, 2023 the company rented some of its office space to Breezy Ltd. At that date Breezy Ltd paid rent covering the next nine months. 6. Depreciation should be provided as follows: Land Nil Buildings 2 percent per year on cost Furniture & Fittings 20 percent per year on reducing balance 7. Goodwill impairment was estimated to be 20%. 8. Corporation tax is estimated to be $42,000 9. The directors proposed on September 20, 2023 to pay the final preference dividends. At a board of directors meeting on October 19, 2023 the directors evaluated the performance of the business over the past financial year and proposed to pay a further 6% ordinary dividend. Required: (a) Prepare the following for McKie Ltd for the financial year ending September 30, 2023: i. Statement of Profit or Loss (20 marks) ii. Statement of changes in equity (8 marks) iii. Statement of Financial Position. (12 marks)

Creditors Sales Revenue 22,500 1,143,700 Land at cost 550,000 Building at cost 570,000 Furniture and fittings at cost 85,000 Bank 14,000 Provision for Depreciation Buildings 120,000 Furniture and fittings 15,000 Discounts 5,700 5,800 Retained Earnings at 1 Oct 2022 14,800 Provision for bad debts 2,200 Goodwill 400,000 Cash 16,400 Inventory at 1 Oct 2022 48,000 Rent Received(from Breezy Ltd) 27,000 Rent 7,900 Wages and Salaries 122,000 Insurance 16,300 Carriage Inwards 2,300 Returns 8,500 12,000 Commission received 5,200 8% Mortgage 100,000 Other Operating Expenses 2,500 Debtors 45,000 Purchases 340,000 Debenture Interest 1,200 Mortgage Interest 4,600 Bad debt 4,700 7% Debentures 150,000 4% Preference Shares @ $0.5 130,000 Ordinary Shares @ $0.75 375,000 General Reserves 127,000 Interim ordinary dividends paid 4,500 2,249,400 2,249,400 The following additional information is available: 1. At September 30, 2023 closing inventory was $32,000 2. The Accountant has determined that the estimate for the provision for bad debts at September 30, 2023 is 10% of debtors. 3. 4. 5. At the end of the period it was discovered that one employee was owed $2,000 in salaries while another was overpaid by $4,000. Additionally insurance prepaid was $300 The following appropriation of the expenses must be made Rent Wages & Salaries Insurance Prov. for Depreciation Admin 80% 60% 50% 70% Selling & Dist 20% 40% 50% 30% On June 1, 2023 the company rented some of its office space to Breezy Ltd. At that date Breezy Ltd paid rent covering the next nine months. 6. Depreciation should be provided as follows: Land Nil Buildings 2 percent per year on cost Furniture & Fittings 20 percent per year on reducing balance 7. Goodwill impairment was estimated to be 20%. 8. Corporation tax is estimated to be $42,000 9. The directors proposed on September 20, 2023 to pay the final preference dividends. At a board of directors meeting on October 19, 2023 the directors evaluated the performance of the business over the past financial year and proposed to pay a further 6% ordinary dividend. Required: (a) Prepare the following for McKie Ltd for the financial year ending September 30, 2023: i. Statement of Profit or Loss (20 marks) ii. Statement of changes in equity (8 marks) iii. Statement of Financial Position. (12 marks)

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion

Section: Chapter Questions

Problem 30CE

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