The following is an extract from the trial balance of CF at 31 March 2006: 1 of 7 GH¢°000 GH¢°000 DR CR Administration expenses 260 Cost of sales 480 Interest paid Interest bearing borrowings Inventory at 31 March 2006 Property, plant and equipment at cost Property, plant and equipment, depreciation to 31 March 2005 190 2,200 220 1,500 540 Distribution costs 200 Revenue 2,000 Notes: (i) Included in the closing inventory at the reporting date was inventory at a cost of GH¢35,000, whose net realisable value was ascertained to be GH¢19,000. (ii) Depreciation is provided for on property, plant and equipment at 20% per year using the reducing balance method. Depreciation is regarded as cost of sales. (iii)A member of the public was seriously injured while using one of CE's products on 4 October 2005. Professional legal advice is that CE will probably have to pay GH¢500,000 compensation. Required: Prepare CE's income statement for the year ended 31 March 2006 down to the line 'profit before tax'.
The following is an extract from the trial balance of CF at 31 March 2006: 1 of 7 GH¢°000 GH¢°000 DR CR Administration expenses 260 Cost of sales 480 Interest paid Interest bearing borrowings Inventory at 31 March 2006 Property, plant and equipment at cost Property, plant and equipment, depreciation to 31 March 2005 190 2,200 220 1,500 540 Distribution costs 200 Revenue 2,000 Notes: (i) Included in the closing inventory at the reporting date was inventory at a cost of GH¢35,000, whose net realisable value was ascertained to be GH¢19,000. (ii) Depreciation is provided for on property, plant and equipment at 20% per year using the reducing balance method. Depreciation is regarded as cost of sales. (iii)A member of the public was seriously injured while using one of CE's products on 4 October 2005. Professional legal advice is that CE will probably have to pay GH¢500,000 compensation. Required: Prepare CE's income statement for the year ended 31 March 2006 down to the line 'profit before tax'.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![The following is an extract from the trial balance of CF at 31 March 2006:
1 of 7
GH¢'000
GH¢ '000
DR
CR
Administration expenses
260
Cost of sales
480
Interest paid
Interest bearing borrowings
190
2,200
Inventory at 31 March 2006
Property, plant and equipment at cost
Property, plant and equipment, depreciation to 31 March 2005
Distribution costs
220
1,500
540
200
Revenue
2,000
Notes:
(i) Included in the closing inventory at the reporting date was inventory at a cost of
GH¢35,000, whose net realisable value was ascertained to be GH¢19,000.
(ii) Depreciation is provided for on property, plant and equipment at 20% per year
using the reducing balance method. Depreciation is regarded as cost of sales.
(iii)A member of the public was seriously injured while using one of CE's products
on 4 October 2005. Professional legal advice is that CE will probably have to pay
GH¢500,000 compensation.
Required:
Prepare CE's income statement for the year ended 31 March 2006 down to the line 'profit
before tax'.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe53463f7-7ad7-44f6-bcdd-4fa06cbc33f8%2F669f7132-069b-4a73-a34b-6e0811aab427%2Fcacvg2b_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The following is an extract from the trial balance of CF at 31 March 2006:
1 of 7
GH¢'000
GH¢ '000
DR
CR
Administration expenses
260
Cost of sales
480
Interest paid
Interest bearing borrowings
190
2,200
Inventory at 31 March 2006
Property, plant and equipment at cost
Property, plant and equipment, depreciation to 31 March 2005
Distribution costs
220
1,500
540
200
Revenue
2,000
Notes:
(i) Included in the closing inventory at the reporting date was inventory at a cost of
GH¢35,000, whose net realisable value was ascertained to be GH¢19,000.
(ii) Depreciation is provided for on property, plant and equipment at 20% per year
using the reducing balance method. Depreciation is regarded as cost of sales.
(iii)A member of the public was seriously injured while using one of CE's products
on 4 October 2005. Professional legal advice is that CE will probably have to pay
GH¢500,000 compensation.
Required:
Prepare CE's income statement for the year ended 31 March 2006 down to the line 'profit
before tax'.
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