SOPL and SOFP

Hi sir, I need your help

ELISEC is preparing its annual financial statements as at 31 December 2X15. The following trial balance has been extracted from its general ledger:

Trial balance in € Debit Credit
Equity shares – 80,000 Cr.
Retained earnings, as at 31. 12. 2X14 – 22,300 Cr.
Building at acquisition cost – 80,000 Dr.
Building accumulated depreciation, as at 31. 12. 2X14 – 12,000 Cr.
Machinery at acquisition cost – 200,000 Dr.
Machinery accumulated depreciation, as at 31. 12. 2X14 – 40,000 Cr.
Inventory (merchandise), as at 31. 12. 2X14 – 47,500 Dr.
Trade payables – 45,400 Cr.
Trade receivables – 55,000 Dr.
Allowances for trade receivables, as at 31. 12. 2X14 – 8,000 Cr.
Cash – 33,700 Dr.
Borrowings from banks – 36,000 Cr.
Revenue from goods sold – 575,000 Cr.
Cost of goods sold – 328,000 Dr.
Administrative expenses – 23,500 Dr.
Distribution expenses – 20,400 Dr.
Marketing expenses – 27,000 Dr.
Interest expense from bank borrowings – 3,600 Dr.

Total 818,700 818,700

To complete the preparation of financial statements, some year-end closing transactions have to be accounted for yet. The relevant information is as follows:

1. Depreciation:
a) building is straight?line depreciated at 5 % per annum on its acquisition cost;
b) accelerated depreciation is applied for machinery at 20 % per year using the
diminishing balance method;
c) depreciation charges are classified as cost of sales.

2. Impairment of receivables:
a) based on past experience, ELISEC estimates that 8% of the closing balance of trade
receivables will never be collected;
b) impairment of uncollectible receivables is classified as other operating
expense/income.

3. Inventory:
a) ELISEC applies the periodic inventory system
b) the closing balance of inventory as at 31 December 2X15 is 75,000 €;

4. Borrowings:
a) 50% of the loan is repayable on 1 June 2X16; the remaining balance shall be repaid
two years later on 1 June 2X18;
b) all interest charges for 2X15 are already accounted for and shown on trial balance.

5. Income tax:
a) tax rate of ELISEC is 20 %;
b) company’s tax advisor has prepared the tax?filling, according to which income tax
expense for 2X15 is 16,350 €;
c) liability from current income tax is due on 1 April 2X16; no advance payments
have been made in 2X15.

Prepare the financial statements of ELISEC as at 31 December 2X15 following generally
accepted accounting principles, including closing transactions.

My workings:

1) Depreciation for building 80.000 x 5% = 4.000 (SOPL)
Depreciation machinery (200.000-40.000) x 20% = 32.000 (SOPL)

SOFP: Non current assets: building – 80.000 – (12.000+4.000) = 64.000
machinery – 200.000 – (40.000 + 32.000) = 128.000

2) 55.000 – 8.000 = 47.000
47.000 x 8% = 3.760 (SOPL)
47.000 – 3.760 = 43.240 ( SOFP)

3) SOFP: Current Asset = 75.000

4) a) I do not know for what operation I need this information, I think simply to put borrowings from bank – 36.000 as non current liabilities in SOFP

5) 16.350 – tax expense in SOPL
16.350 – Current liability in SOFP

SOPL:

Revenue 575.000
Cost of goods (328.000 + 36.000 (Depreciation))
Administrative exp. (23.500)
Distribution exp. (20.400)
Marketing exp. (27.000)
Other operating exp.(allowance for receivable) (3.760)
Interest exp. from bank borrowings (3.600)
Tax expense (16.350)

Net profit 116.390

SOFP:

Non current assets: Building – 64.000
Machinery – 128.000

Current assets: Cash – 33.700
Inventory – 75.000
Receivables – 43.240

Total Assets: 343.940

Equity: Shares – 80.000
Retained Earnings – 22.300 + 116.390

Non current liabilities: Borrowings from bank – 36.000

Current liabilities: Payables – 45.400
Loan Interest – 3.600
Tax payable – 16.350

Total equity and liabilities: 320.040

I guess I am wrong in 4th and 5th points, as from my calculations Assets does not equal to the sum of Equity and Liabilities in SOFP. Please explain me this case. Thanks in advance!