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- March 16, 2023 at 8:14 am #681395
AT Plc compiles its financial statements to 30 June annually. At 30 June 20X9, the company’s trial balance was as follows: GHS’000 GHS’000 Sales revenue 14,800 Purchases 8,280 Inventory at 1 July 20X8 1,390 Distribution costs 1,080 Administration expenses 1,460 Land at valuation 10,500 Building: Cost 8,000 Accumulated depreciation at 1 July 20X8 2,130 Plant and equipment: Cost 12,800 Accumulated depreciation at 1 July 20X8 2,480 Trade receivables and payables 4,120 2,240 Cash at bank 160 Stated capital: Ordinary shares as at 1 July 20X8 12,000 issued during year 6,000 Capital surplus as at 1 July 20X8 3,000 Income surplus 3,140 10% loan notes (redeemable 20X8) (issued 1 April 20X9 with interest payable 31 March and 30 2,000 September each year) 47,790 47,790
Additional Information The following matters remain to be adjusted for in preparing the financial statements for the year ended 30 June 20X9: (a) Inventory at 30 June 20X9 amounted to GHS1,560,000 at cost. A review of inventory items revealed the need for some adjustments for two inventory lines. (i) Items which had cost GHS80,000 and which would normally sell for GHS120,000 were found to have deteriorated. Remedial work costing GHS20,000 would be needed to enable the items to be sold for GHS90,000. (ii) Some items sent to customers on sale or return terms had been omitted from inventory and included as sales in June 20X9. The cost of these items was GHS16,000 and they were included in sales at GHS24,000. In July 20X9 the items were returned in good condition by the customers. (b) Depreciation is to be provided as follows: Buildings 2% per year on cost Plant and equipment 20% per year on cost Eighty per cent of the depreciation is to be charged in cost of sales, and 10% each in distribution costs and administrative expenses. (c) The land is to be revalued to GHS12,000,000. No change was required to the value of the buildings. (d) Accruals and prepayments were: Accruals Prepayments GHS’000 GHS’000 Distribution costs 190 120 Administrative expenses 70 60
Required (a) Prepare the company’s statement of profit or loss and comprehensive income for the year ended 30 June 20X9 and statement of financial position as at that date for publication, complying with the provisions of International Financial Reporting Standards.March 16, 2023 at 9:38 am #681400
In this question,how will the inventory adjustments be recorded?March 16, 2023 at 10:16 am #681402Kim SmithKeymaster
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Welcome to OpenTuition forums – but please note that this is Audit and not Financial Accounting.
You need to select the forum that is relevant to the exam but should also be aware that we do not provide a service to answer assignments. If you are looking at a Q, you should also have a published answer. We are happy to answer queries to help you understand answers, but you need to say where this Q is published (e.g. in a Kaplan/BPP kit).March 16, 2023 at 8:19 pm #681432
Thanks for the corrections ,I came across the Q from my processor note,I didn’t really get how the inventory was solve there,that was why I posted it here ,but I guess I should post it to the right forum first,thank you.
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