Financial statements

CLERC You are about to commence preparation of the financial statements of Clerc for the year ended 31 December 20X9. The entity’s trial balance as at 31 December 20X9 is shown below. Debit Credit $ $ Share capital Share premium 100,000 20,000 Revaluation reserve at 1 January 20X9 50,000 Trade and other payables 13,882 Land & buildings – value/cost 210,000 accumulated depreciation at 1 January 20X9 30,000 Plant and machinery – cost 88,000 accumulated depreciation at 1 January 20X9 16,010 Trade and other receivables 8,752 Accruals 3,029 5% bank loan repayable 20Y3 40,000 Cash and cash equivalents 6,993 Retained earnings at 1 January 20X9 23,893 Sales 178,833 Purchases 130,562 Distribution costs 7,009 Administrative expenses 7,100 Inventories at 1 January 20X9 17,331 Bank interest received 100 (i) The interest for the year on the bank loan has not yet been paid or accrued. (ii) Land, which is non-depreciable, is included in the trial balance at a value of $110,000. At 31 December 20X9 it was revalued to $150,000 and this revaluation is to be included in the financial statements. (iii) Depreciation is to be provided for the year to 31 December 20X9 as follows: Buildings 10% per annum Straight line basis Plant and machinery 20% per annum Reducing balance basis As part of the buildings contains the office accommodation and part of the buildings contains the plant and machinery, the depreciation for the ‘Buildings’ should be allocated between cost of sales and administrative expenses as follows: % Cost of sales 40 Administrative expenses 60 (iv) Included in trade receivables is a balance of $1,720 that is considered to be irrecoverable due to the customer going into administration and the Directors of Clerc have decided to write off this receivable. (v) Inventories at the close of business on 31 December 20X9 were valued at cost of $19,871. Included in this amount was an inventory line at a cost of $4,000 that, due to change in legislation, is now illegal. Clerc could rectify the items at a cost of $2,500 and plans to do so. The items usually retail to customers at $6,000. (vi) The tax charge for the year has been calculated at $7,162. Hi. Should we substract accruals which shown in trial balance from gross profit when we preparing SOPL? Thank you in advance