Dr Cr $000 $000 Ordinary share capital (500,000 shares) 1,000 Foreign currency translation reserve 26 Investment property 120 Retained earnings 1 January 2021 269 Inventory (raw materials) at 1 January 2021 20 Sales 1297 Purchases 349 Purchases returns 5 Sales returns 4 Carriage outwards 9 Work-in-progress at 1 January 2021 35 Intangible assets 342 Administrative wages 28 Machine – cost 259 Accumulated depreciation (machine) – 1 January 2021 80 Delivery vehicle hire 35 Distribution expenses 22 Administrative expenses 34 Directors’ salaries 92 Sales allowances 2 Accounts payable 494 Bank overdraft 3 Accounts receivable 381 Cash at bank 140 Land 303 2175 2175 During the year to 31 December 2021, assets with a carrying amount of $3,790 were sold at a loss of $5,850. No entries have yet been made to record this. Depreciation charges for the year should be calculated at 10% on cost. A fire at the factory on 31 December 2021 damaged the machine, leaving it with a lower operating capacity. The accountant considers that Beta will need to recognise an impairment loss in relation to this damage. An equivalent new machine would cost $70,000. The machine could be sold in its current condition for a gross amount of $45,000. Dismantling costs would amount to $2,000. In its current condition, the machine could operate for three more years which gives it a value in use figure of $38,685. Inventories (raw materials) at 1 January 2022 were valued at $2,000, work-in-progress at 1 January 2022 was valued at $5,000 The income tax for the year is evaluated as $2,000 Beta works as an agent for a number of smaller contractors, earning commission of 10%. Beta’s revenue includes $6,000 received from clients under these agreements with $5,400 in cost of sales representing the amount paid to the contractors. Receivables totalling $14,000 are to be written off Intangible assets are to be amortized at 10% on cost Allowance for receivables should be created as 0,1% of net sales On 7 November 2021 there was a fire in the warehouse, in which inventory valued at $12,000 was destroyed. Under the terms of the insurance contract, the insurance company has stated that it will only pay out the first $3,000 of the claim. No entries have yet been made to record this. Dividends $0.05/share were accrued at 31 December 2021. Prepare a statement of profit or loss and other comprehensive income for the year ended 31 December 2021,

Dr Cr $000 $000 Ordinary share capital (500,000 shares) 1,000 Foreign currency translation reserve 26 Investment property 120 Retained earnings 1 January 2021 269 Inventory (raw materials) at 1 January 2021 20 Sales 1297 Purchases 349 Purchases returns 5 Sales returns 4 Carriage outwards 9 Work-in-progress at 1 January 2021 35 Intangible assets 342 Administrative wages 28 Machine – cost 259 Accumulated depreciation (machine) – 1 January 2021 80 Delivery vehicle hire 35 Distribution expenses 22 Administrative expenses 34 Directors’ salaries 92 Sales allowances 2 Accounts payable 494 Bank overdraft 3 Accounts receivable 381 Cash at bank 140 Land 303 2175 2175 During the year to 31 December 2021, assets with a carrying amount of $3,790 were sold at a loss of $5,850. No entries have yet been made to record this. Depreciation charges for the year should be calculated at 10% on cost. A fire at the factory on 31 December 2021 damaged the machine, leaving it with a lower operating capacity. The accountant considers that Beta will need to recognise an impairment loss in relation to this damage. An equivalent new machine would cost $70,000. The machine could be sold in its current condition for a gross amount of $45,000. Dismantling costs would amount to $2,000. In its current condition, the machine could operate for three more years which gives it a value in use figure of $38,685. Inventories (raw materials) at 1 January 2022 were valued at $2,000, work-in-progress at 1 January 2022 was valued at $5,000 The income tax for the year is evaluated as $2,000 Beta works as an agent for a number of smaller contractors, earning commission of 10%. Beta’s revenue includes $6,000 received from clients under these agreements with $5,400 in cost of sales representing the amount paid to the contractors. Receivables totalling $14,000 are to be written off Intangible assets are to be amortized at 10% on cost Allowance for receivables should be created as 0,1% of net sales On 7 November 2021 there was a fire in the warehouse, in which inventory valued at $12,000 was destroyed. Under the terms of the insurance contract, the insurance company has stated that it will only pay out the first $3,000 of the claim. No entries have yet been made to record this. Dividends $0.05/share were accrued at 31 December 2021. Prepare a statement of profit or loss and other comprehensive income for the year ended 31 December 2021,

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

	Dr	Cr
	$000	$000
Ordinary share capital (500,000 shares)		1,000
Foreign currency translation reserve		26
Investment property	120
Retained earnings 1 January 2021		269
Inventory (raw materials) at 1 January 2021	20
Sales		1297
Purchases	349
Purchases returns		5
Sales returns	4
Carriage outwards	9
Work-in-progress at 1 January 2021	35
Intangible assets	342
Administrative wages	28
Machine – cost	259
Accumulated depreciation (machine) – 1 January 2021		80
Delivery vehicle hire	35
Distribution expenses	22
Administrative expenses	34
Directors’ salaries	92
Sales allowances	2
Accounts payable		494
Bank overdraft		3
Accounts receivable	381
Cash at bank	140
Land	303
	2175	2175

During the year to 31 December 2021, assets with a carrying amount of $3,790 were sold at a loss of $5,850. No entries have yet been made to record this. Depreciation charges for the year should be calculated at 10% on cost.
A fire at the factory on 31 December 2021 damaged the machine, leaving it with a lower operating capacity. The accountant considers that Beta will need to recognise an impairment loss in relation to this damage. An equivalent new machine would cost $70,000. The machine could be sold in its current condition for a gross amount of $45,000. Dismantling costs would amount to $2,000. In its current condition, the machine could operate for three more years which gives it a value in use figure of $38,685.
Inventories (raw materials) at 1 January 2022 were valued at $2,000, work-in-progress at 1 January 2022 was valued at $5,000
The income tax for the year is evaluated as $2,000
Beta works as an agent for a number of smaller contractors, earning commission of 10%. Beta’s revenue includes $6,000 received from clients under these agreements with $5,400 in cost of sales representing the amount paid to the contractors.
Receivables totalling $14,000 are to be written off
Intangible assets are to be amortized at 10% on cost
Allowance for receivables should be created as 0,1% of net sales
On 7 November 2021 there was a fire in the warehouse, in which inventory valued at $12,000 was destroyed. Under the terms of the insurance contract, the insurance company has stated that it will only pay out the first $3,000 of the claim. No entries have yet been made to record this.
Dividends $0.05/share were accrued at 31 December 2021.

Prepare a statement of profit or loss and other comprehensive income for the year ended 31 December 2021,

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