1 Introduction to published accounts Chapter learning objectives

Introduction to published accounts

Additional information
1 Inventory at 31 March 20X9 was valued at $250,000.
2 Buildings and plant and machinery are depreciated on a straight-
line basis (assuming no residual value) at the following rates:
On cost: Buildings 5%
Plant and machinery 20%
3 There were no purchases or sales of non-current assets during
the year to 31 March 20X9.
4 The depreciation charges for the year to 31 March 20X9 are to be
apportioned as follows:
Cost of sales 60%
Distribution costs 20%
Administrative expenses 20%
5 Income taxes for the year to 31 March 20X9 are estimated to be
$135,000.
6 The 10% loan note was issued on 1 April 20X7 and is repayable
five years from that date.
7 The year-end provision for warranty claims has been estimated at
$75,000. Warranty costs are charged to administrative expenses.
Required:
Prepare Picklette’s statement of profit or loss for the year to 31 March
20X9 and a statement of financial position as at that date.
Solution
Picklette: Statement of profit or loss
$000
Revenue 1,300
Cost of sales (470 + 150 (Op Inv) – 250 (Cl Inv)
+ (60% × 30 (W1))) (388)
–––––
Gross profit 912
Distribution (240 + (20% × 30 (W1))) (246)
Administration (170 + (20% × 30 (W1)) + – 15 (Warranty) (161)
Profit from operations 505
Finance costs (80 × 10%) (8)
–––––
Profit before tax 497
Income Tax (135 + 10) (145)
–––––
Profit for the year 352
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10 KAPLAN PUBLISHING

Chapter 1



Statement of financial position
$000 $000
Non-current assets
Property, plant and equipment (W1) 182
Current assets
Inventory 250
Receivables 728
Bank 9
–––––
987
–––––
1,169
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Share capital 200
Retained earnings (W2) 616
–––––
816
Non-current liabilities
Loan 80
Provision for warranties (90 (TB) – 15) 75
–––––
155
Payables
(60 + 3 (accrued interest)) 63
Tax liability 135
–––––
198
–––––
1,169
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KAPLAN PUBLISHING 11