Question Three The following trial balance relates to HIS GLORY LTD, a quoted company at 31" December 2007. CR DR GH¢ 130,000 GHe Land and buildings (1/1/07) Plant at cost 128.000 Depreciation of plant (1/1/07) 32,000 Investments 26,500 Cost of sales 89,200 Investment income 2,200 Distribution costs 11,000 Administrative expenses 12,500 Interest on loan paid 800 Inventory 31/12/07 37,900 Current Corporation Tax 400 Trade receivables 35,100 Revenue 180,400 Ordinary shares (issued at GH¢1 each) 60,000 Retained earnings (1/1/07) 25,500 2% loan (2005 –- 2010) 80,000 Trade payables 34,700 Revaluation surplus arising from land & building 14,000 Deferred tax provision (1/1/07) 11,200 Ассruals 24,000 Bank 6,600 471,000 471.000 The following notes are relevant: HIS GLORY LTD has a policy of revaluing its land and building at each year end. The valuation in the trial balance includes a land element of GH¢30,000. The useful a. life of the buildings at that date (1/1/07) was 20 years. On 31/12/07, a professional valuer valued the buildings at GH¢92,000 with no change in the value of the land. Depreciation of buildings is charged at 60% to cost of sales and 20% each to distribution costs and administrative expenses. b. During the year HIS GLORY LTD manufactured an additional plant for its operations. The details of the costs, which have been included in cost of sales in the trial balance, were: GH¢ Material Cost 6,000 Direct labour cost 4,000 Machine time cost 8,000 Directly attributable overheads 6,000 The manufacture of the plant was completed on 30/06/07 and the plant was brought into immediate use, but its cost has not yet been capitalized. All plants are depreciated at 12½% per annum (time apportioned where relevant) using the reducing balance method and charged to cost of sales. No non-current assets were sold during the year. c. The fair value of the investments held at 31/12/07 was GH¢27,100. d. The balance on taxation in the trial balance represents the over provision of the

FINANCIAL ACCOUNTING
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Question Three
The following trial balance relates to HIS GLORY LTD, a quoted company at 31" December
2007.
DR
CR
GH¢
GH¢
Land and buildings (1/1/07)
130,000
Plant at cost
128,000
Depreciation of plant (1/1/07)
32,000
Investments
26,500
Cost of sales
89,200
Investment income
2,200
Distribution costs
11,000
Administrative expenses
12,500
Interest on loan paid
800
Inventory 31/12/07
37.900
Current Corporation Tax
400
Trade receivables
35,100
Revenue
180,400
Ordinary shares (issued at GH¢1 each)
60,000
Retained earnings (1/1/07)
25,500
2% loạn (2005 – 2010)
80,000
Trade payables
34,700
Revaluation surplus arising from land & building
14,000
Deferred tax provision (1/1/07)
11,200
Accruals
24,000
Bank
_6,600
471.000
471.000
The following notes are relevant:
HIS GLORY LTD has a policy of revaluing its land and building at each year end.
The valuation in the trial balance includes a land element of GH¢30,000. The useful
life of the buildings at that date (1/1/07) was 20 years. On 31/12/07, a professional
valuer valued the buildings at GH¢92,000 with no change in the value of the land.
Depreciation of buildings is charged at 60% to cost of sales and 20% each to
distribution costs and administrative expenses.
a.
b.
During the year HIS GLORY LTD manufactured an additional plant for its
operations. The details of the costs, which have been included in cost of sales in the
trial balance, were:
GH¢
Material Cost
6,000
Direct labour cost
4,000
Machine time cost
8,000
Directly attributable overheads
6,000
The manufacture of the plant was completed on 30/06/07 and the plant was brought
into immediate use, but its cost has not yet been capitalized.
All plants are depreciated at 12½% per annum (time apportioned where relevant)
using the reducing balance method and charged to cost of sales.
No non-current assets were sold during the year.
The fair value of the investments held at 31/12/07 was GH¢27,100.
с.
d.
The balance on taxation in the trial balance represents the over provision of the
dad 21/12/07 i
Transcribed Image Text:Question Three The following trial balance relates to HIS GLORY LTD, a quoted company at 31" December 2007. DR CR GH¢ GH¢ Land and buildings (1/1/07) 130,000 Plant at cost 128,000 Depreciation of plant (1/1/07) 32,000 Investments 26,500 Cost of sales 89,200 Investment income 2,200 Distribution costs 11,000 Administrative expenses 12,500 Interest on loan paid 800 Inventory 31/12/07 37.900 Current Corporation Tax 400 Trade receivables 35,100 Revenue 180,400 Ordinary shares (issued at GH¢1 each) 60,000 Retained earnings (1/1/07) 25,500 2% loạn (2005 – 2010) 80,000 Trade payables 34,700 Revaluation surplus arising from land & building 14,000 Deferred tax provision (1/1/07) 11,200 Accruals 24,000 Bank _6,600 471.000 471.000 The following notes are relevant: HIS GLORY LTD has a policy of revaluing its land and building at each year end. The valuation in the trial balance includes a land element of GH¢30,000. The useful life of the buildings at that date (1/1/07) was 20 years. On 31/12/07, a professional valuer valued the buildings at GH¢92,000 with no change in the value of the land. Depreciation of buildings is charged at 60% to cost of sales and 20% each to distribution costs and administrative expenses. a. b. During the year HIS GLORY LTD manufactured an additional plant for its operations. The details of the costs, which have been included in cost of sales in the trial balance, were: GH¢ Material Cost 6,000 Direct labour cost 4,000 Machine time cost 8,000 Directly attributable overheads 6,000 The manufacture of the plant was completed on 30/06/07 and the plant was brought into immediate use, but its cost has not yet been capitalized. All plants are depreciated at 12½% per annum (time apportioned where relevant) using the reducing balance method and charged to cost of sales. No non-current assets were sold during the year. The fair value of the investments held at 31/12/07 was GH¢27,100. с. d. The balance on taxation in the trial balance represents the over provision of the dad 21/12/07 i
Current Corporation Tax
400
Trade receivables
35,100
Revenue
180,400
Ordinary shares (issued at GH¢1 each)
60,000
Retained earnings (1/1/07)
25,500
2% loan (2005 – 2010)
80,000
Trade payables
34,700
Revaluation surplus arising from land & building
14,000
Deferred tax provision (1/1/07)
11,200
Accruals
24,000
Bank
6,600
471,000
471.000
The following notes are relevant:
HIS GLORY LTD has a policy of revaluing its land and building at each year end.
The valuation in the trial balance includes a land element of GH¢30,000. The useful
life of the buildings at that date (1/1/07) was 20 years. On 31/12/07, a professional
valuer valued the buildings at GH¢92,000 with no change in the value of the land.
Depreciation of buildings is charged at 60% to cost of sales and 20% each to
distribution costs and administrative expenses.
a.
b.
During the year HIS GLORY LTD manufactured an additional plant for its
operations. The details of the costs, which have been included in cost of sales in the
trial balance, were:
GH¢
Material Cost
6,000
Direct labour cost
4,000
Machine time cost
8,000
Directly attributable overheads
6,000
The manufacture of the plant was completed on 30/06/07 and the plant was brought
into immediate use, but its cost has not yet been capitalized.
All plants are depreciated at 12½% per annum (time apportioned where relevant)
using the reducing balance method and charged to cost of sales.
No non-current assets were sold during the year.
The fair value of the investments held at 31/12/07 was GH¢27,100.
c.
d.
The balance on taxation in the trial balance represents the over provision of the
previous year's estimate. The estimated tax liability for the year ended 31/12/07 is
GH¢18,700.
е.
At 31/12/07 there were GH¢40,000 of taxable temporary differences. Deferred tax
provision should accordingly be adjusted to GH¢ 10,000 since deferred tax provision
is at 25% of all taxable temporary differences.
f.
The directors have proposed dividend of GH¢0.40 per share for 2007. This is to be
dealt with in the financial statements in accordance with IAS 10.
Required:
Prepare for HIS GLORY LTD and in accordance with the International Financial Reporting
Standards (IFRS),
a)
b)
An Income Statement for the year ended 31 December, 2007.
A Statement of Financial Position as at 31 December, 2007
Transcribed Image Text:Current Corporation Tax 400 Trade receivables 35,100 Revenue 180,400 Ordinary shares (issued at GH¢1 each) 60,000 Retained earnings (1/1/07) 25,500 2% loan (2005 – 2010) 80,000 Trade payables 34,700 Revaluation surplus arising from land & building 14,000 Deferred tax provision (1/1/07) 11,200 Accruals 24,000 Bank 6,600 471,000 471.000 The following notes are relevant: HIS GLORY LTD has a policy of revaluing its land and building at each year end. The valuation in the trial balance includes a land element of GH¢30,000. The useful life of the buildings at that date (1/1/07) was 20 years. On 31/12/07, a professional valuer valued the buildings at GH¢92,000 with no change in the value of the land. Depreciation of buildings is charged at 60% to cost of sales and 20% each to distribution costs and administrative expenses. a. b. During the year HIS GLORY LTD manufactured an additional plant for its operations. The details of the costs, which have been included in cost of sales in the trial balance, were: GH¢ Material Cost 6,000 Direct labour cost 4,000 Machine time cost 8,000 Directly attributable overheads 6,000 The manufacture of the plant was completed on 30/06/07 and the plant was brought into immediate use, but its cost has not yet been capitalized. All plants are depreciated at 12½% per annum (time apportioned where relevant) using the reducing balance method and charged to cost of sales. No non-current assets were sold during the year. The fair value of the investments held at 31/12/07 was GH¢27,100. c. d. The balance on taxation in the trial balance represents the over provision of the previous year's estimate. The estimated tax liability for the year ended 31/12/07 is GH¢18,700. е. At 31/12/07 there were GH¢40,000 of taxable temporary differences. Deferred tax provision should accordingly be adjusted to GH¢ 10,000 since deferred tax provision is at 25% of all taxable temporary differences. f. The directors have proposed dividend of GH¢0.40 per share for 2007. This is to be dealt with in the financial statements in accordance with IAS 10. Required: Prepare for HIS GLORY LTD and in accordance with the International Financial Reporting Standards (IFRS), a) b) An Income Statement for the year ended 31 December, 2007. A Statement of Financial Position as at 31 December, 2007
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