Financial Report Questions

The following balances have been exh’acted from the accounting records of Bonnie at
31 December 20X6:

Reference to notes (numbered)

Revenue (note 2) 3,845,000
Opening inventory 360,000
Purchases (note 3) 2,184,000
Carriage inwards 119,000
Carriage outwards 227,000
Of?ce equipment at 1 January 20X6 (notes 2, 3 and 4)
Cost 460,000
Accumulated depreciation 92,000
Trade receivables 620,000
Loss allowance for receivables at 1 January 20×6 (note 5) 20,000
Irrecoverabie debs written off during the year I 15,000
Sundry administrative expenses 416,000

The following further information is available:

(1) Closing inventory amounts to $450,000.

(2) Some of?ce equipment, which had cost $20,000, with accumulated depreciation at 1
January 20×6 of $14,000, was sold for $15,000 during the year. The sale proceeds
were included in the sales ?gure of $3,845,000.

(3) The cost of new equipment purchased on 1 July 20X6 for $60,000 has been
included in the purchases ?gure of $2,184,000

(4) The company depreciates its of?ce equipment at 20 % per year on the straight line
basis, with proportionate depreciation in the year of purchase but none in the year of
sale. None of the equipment held at 1 January 20X6 was more than three years old.

(5) The loss allowance for trade receivables at 31 December 20X6 is to be 5% of
accounts receivable.

(6) Accruals and prepayments on sundry administrative expenses at 31 December 20X6
were:
Accrued expenses 28,700
Prepaid expenses 14,400

(7) The directors propose a dividend of 6: per share on the equity shares (4,000,000
shares of $0.25 each) to be paid in July 20×7.

No dividends were paid in 20X6.

solutions:

Adjusted sales revenue for year ended 31 December 20X6? ? 3845000 -14000(accumulated depreciation) =3831000 (says the 15 000 sales is already included in the figure so I did not include it)

What is the adjusted purchases for year ended 31 December 20X6? ? 2184000 (not sure what to adjust as it says its already been included)

What is the cost of sales in statement of profit or loss for year ended 31 December 20X6? ? COS= 360000+2184000+119000-450000=2213000

What is gross profit in statement of profit or loss for year ended 31 December 20X6? ? Revenue – cost of sales = 3831000-2213000 = 1618000

What is the sundry administrative expenses for year ended 31 December 20X6? ? 416000-28700+14400 = 401700 (I took the accrual out as this is for next year?)

What is the irrecoverable debt in statement of profit or loss for year ended 31 December 20X6? ? 15000 (don’t see what’s changed)

What is the depreciation for office equipment brought forward from prior year in statement of profit or loss for year ended 31 December 20X6? ? unsure

What is the depreciation for new equipment purchased during the year in statement of profit or loss for year ended 31 December 20X6? ? 60000x 20% = 12000

What is the total depreciation in statement of profit or loss for year ended 31 December 20X6? ? 14000 + 12000 = 26000

What is the profit for the year ended 31 December 20X6? ? unsure (too many calculations are overlapping each other so I am unsure what figures to even use)
How much is the proposed dividend? ? 4 000 000 x 0.25 = $1 000 000

Should it be under current liability? Yes or No? ? Yes because these are liable to be paid in July 20X7

Should it be disclosed in a note in Bonnie’s published financial statements? Yes or No ? Yes because dividends to be paid are to be disclosed in the notes

Hello, can I please get some assistance with the above if these answers and calculations are correct or not? I’d appreciate it if someone can help me calculate the ones that are wrong? So far, I tried to the best of my abilities.