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why the closing inventory is 1440

why the closing inventory is 1440

FINANCIAL ACCOUNTING
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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why the closing inventory is 1440
The following trial balance has been extracted from the books of Tortoise Ltd as at 31 December 2020 Advertising cost Directors' remuneration Salesmen's salaries Office rent Warehouse wages Administration expenses Distribution cost Share capital £1 Share premium Revaluation surplus Dividend paid Cash at bank and in hand Receivables Interest paid Dividend received Interest received Hire of vehicles Audit fee Land and buildings at cost (land 2280, buildings 600) Land and buildings accumulated depreciation Plant and machinery at cost Plant and machinery accumulated depreciation Retained earnings account (at 1 January 2020) Purchases Sales Inventory at 1 January 2020 Trade payables Bank loan £000 306 210 300 324 318 600 462 192 108 1,998 150 204 66 2,880 2,400 7,560 840 18,918 £000 1,620 540 180 120 6 180 1,020 1,410 12,990 162 690 18,918
Transcribed Image Text:The following trial balance has been extracted from the books of Tortoise Ltd as at 31 December 2020 Advertising cost Directors' remuneration Salesmen's salaries Office rent Warehouse wages Administration expenses Distribution cost Share capital £1 Share premium Revaluation surplus Dividend paid Cash at bank and in hand Receivables Interest paid Dividend received Interest received Hire of vehicles Audit fee Land and buildings at cost (land 2280, buildings 600) Land and buildings accumulated depreciation Plant and machinery at cost Plant and machinery accumulated depreciation Retained earnings account (at 1 January 2020) Purchases Sales Inventory at 1 January 2020 Trade payables Bank loan £000 306 210 300 324 318 600 462 192 108 1,998 150 204 66 2,880 2,400 7,560 840 18,918 £000 1,620 540 180 120 6 180 1,020 1,410 12,990 162 690 18,918
The following additional information is available: (a) Inventory at December 2020 was valued at a cost of £1,500,000. Included in this balance was goods that had cost £90,000. These goods had become damaged during the year and it is considered that the goods could be sold for £30,000. (b) Depreciation for the year to 31 December 2020 is to be charged against cost of sales as follows: Buildings 5% on cost (straight line), Plant and Machinery 30% on carrying amount (Reducing balance). (c) Land is to be revalued upwards by £600,000. (d) Income tax of £990,000 is to be provided for the year to 31 December 2020. (e) The bank loan is repayable in five years' time. Required: Prepare the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of financial position for publication for year ended 31 December 2020. Show all workings.
Transcribed Image Text:The following additional information is available: (a) Inventory at December 2020 was valued at a cost of £1,500,000. Included in this balance was goods that had cost £90,000. These goods had become damaged during the year and it is considered that the goods could be sold for £30,000. (b) Depreciation for the year to 31 December 2020 is to be charged against cost of sales as follows: Buildings 5% on cost (straight line), Plant and Machinery 30% on carrying amount (Reducing balance). (c) Land is to be revalued upwards by £600,000. (d) Income tax of £990,000 is to be provided for the year to 31 December 2020. (e) The bank loan is repayable in five years' time. Required: Prepare the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of financial position for publication for year ended 31 December 2020. Show all workings.
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