The statement of financial position of WXY Ltd as of 31 December 2021 is presented below: ASSETS Non-current assets Property, plant and equipment Buildings Plant and equipment Motor vehicles Current assets Inventories Trade receivables Prepayments Cash Total assets Cost Accumulated depreciation £000 1250 720 116 2086 £000 (249) (144) (55) (448). WXY Ltd Statement of Financial Position as of 31 December 2021 £000 1001 576 61 1638 820 430 5 18 1273 2911
The following additional information is available:
1. The buildings have an estimated useful life of 25 years and an estimated residual value of £5,000. The straight-line method is applied to calculate annual depreciation expense. The fair value of the buildings as of 31 December 2022 is estimated to be £1,200,000 and the company revalued the buildings to their fair value on that day.
2. The plant and equipment are
3. The motor vehicles consisted of a heavy truck with a cost of £76,000 and a light truck with a cost of £40,000. Both trucks had an estimated useful life of 8 years. The heavy truck had an estimated residual value of £4,000 and the light truck had an estimated residual value of £2,000. The trucks are valued using the cost model. As of 31 December 2021, both trucks had been used for 4 years. On 1 January 2022, the operating manager considered that the useful life of the heavy truck only remained 3 years. The residual value remained unchanged. The trucks are depreciated using the straight-line method. The light truck was sold on 30 June 2022 for £20,000 and the full amount was received in cash on that day.
4. The prepayments of £5,000 as of 31 December 2021 represented prepaid property insurance for the period from 1 January 2022 to 31 March 2022. On 1 April 2022, the company paid £24,000 for insurance, £6,000 of which was prepaid insurance for the period from 1 January 2022 to 31 March 2023.
5. On 1 May 2022, the company made a one-for-six bonus issue to the existing shareholders. The bonus issue was funded by
6. The loan notes were issued by a commercial bank to the company on 31 December 2021. The loan notes are secured and have an annual interest rate of 10%. Payment for the interest associated with the loan is made every half year. On 1 July 2022, the company paid interest on the loan for the first half year. As of 31 December 2022, the loan interest for the second half year had not been paid.
7. During the 2022 financial year, the company purchased inventories on credit for £710,000 and sold inventories (which cost £1,350,000) on credit for £2,900,000.
8. During the 2022 financial year, receipts from trade receivables totaled £1,387,500.
9. A dividend of £0.20 per share is approved by the board on 1 December 2022. The dividend has been declared to the shareholders but is unpaid as at 31 December 2022.
10. Electricity expense for the first three quarters of the 2022 financial year totaled £26,000 and was paid on 1 October 2022. The electricity bill for the fourth quarter has not been received by the company as of 31 December 2022. The company estimated that the electricity expense for the fourth quarter was approximately £8,000.
11. Wages totaling £654,000 were paid in cash during the 2022 financial year. Wages for casual staff, amounting to £12,000, has not been paid as at 31 December 2022.
12. Petrol costs totaling £9,000 were paid in cash during the 2022 financial year.
13. Payments to trade payables totaled £970,000 during the 2022 financial year.
14. An accounting error caused sales revenue of the 2022 financial year to be overstated by £240,000.
Required:
For Wind Ltd, prepare (a) the income statement for the year ended on 31 December 2022
Please only enter numbers without any commas and pound signs. Enter your calculated amount without rounding. If an amount needs to be subtracted, show it in parentheses.
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