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'.

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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