You are the assistant accountant with BEST EVER Ltd. Your boss has asked you to preparethe draft Income Statement, Statement of Financial Position and Statement of
Changes in Equity for the year ended 31 December 2014, for internal use, based on
the following Trial Balance (extracted from the computerised record keeping system)
and the additional information shown below.
The company's authorized share capital is as follows:
l 2,000,000 Ordinary Shares of £1 each
l 1,500,000 7% Preference Shares of £1 each
DR CR
£000 £000
Profit & Loss Account (1 January 2014) 182
Revenue 5,250
Purchases 3,600
Inventory 220
Debtors 40
Creditors 38
Wages & Salaries 720
Administrative Expenses540
Auditor's fees 26
Heating & Lighting 43
Rent & Rates 137
Premises 2700
Fixture and Fittings (NBV @ 31/12/2013)730
Motor Vehicles (NBV @ 31/12/2013) 380
Provision for Depreciation (1 January 2014)
Fixtures & Fittings 146
Motor Vehicles 152
Ordinary Share Capital 2,000
7% Preference Share Capital 1,500
General Reserve 300
Cash and cash equivalents 432
9,668 9,668
Additional Information
1 Clerical and management staff were awarded a bonus amounting to £4,000 in mid-December 2014. This bonus has not been paid yet and it should be classified as an administrative expense.
2 Rent & Rates include £8,000which relates to the coming year.
3 Closing inventory at 31 December 2014 was valued at £280,000.
4 It is estimated that corporation tax of £8,000 will be payable on the profits for the year.
5 Preference Dividend should for theyear should be provided in full.
6 An Ordinary Dividend of 15p per share is proposed.
7 The directors propose to provide for the depreciation of non-current assets for the year as follows:
Fixtures and Fittings @ the rate of 20% per annum using the straight-line method
Motor Vehicles @ the rate of 20% per annum using the straight-line method
8 Transfer £8,000 to the General Reserve.
Pro forma layout
Please note that this pro forma provides a guide to the structure and presentation ofthe financial statements - it is not an exhaustive list of all possible items.
BEST EVER Ltd
Income Statement for year ending
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£000
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£000
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Revenue
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Less Cost of Goods Sold:
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Gross Profit
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Less Expenses:
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Profit on ordinary activities before taxation
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Taxation
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Profit on ordinary activities after taxation
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Less Appropriations
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Statement of Financial Position as at
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£000
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£000
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Non-current Assets
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Current Assets
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Total Assets
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Capital and Reserves
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Equity
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Non-current liabilities
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Current liabilities
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Total Equity and Liabilities
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