Prepare the draft income statement

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Reference no: EM13854615

You are the assistant accountant with BEST EVER Ltd. Your boss has asked you to preparethe draft Income Statement, Statement of Financial Position and Statement of

Changes in Equity for the year ended 31 December 2014, for internal use, based on

the following Trial Balance (extracted from the computerised record keeping system)

and the additional information shown below. 

The company's authorized share capital is as follows:

l  2,000,000 Ordinary Shares of £1 each

l  1,500,000 7% Preference Shares of £1 each

DR                 CR

£000                              £000

Profit & Loss Account (1 January 2014)                                                                                 182

Revenue                                                                                                                                5,250

Purchases                                                                                       3,600

Inventory  220

Debtors                                                 40

Creditors                                                                     38

Wages & Salaries                                        720

Administrative Expenses540

Auditor's fees                                            26

Heating & Lighting                                        43

Rent & Rates                                            137

Premises                                               2700

Fixture and Fittings (NBV @ 31/12/2013)730

Motor Vehicles (NBV @ 31/12/2013)                                             380

Provision for Depreciation (1 January 2014)

Fixtures & Fittings                                                       146

Motor Vehicles                                                                                                              152

Ordinary Share Capital                                                                                         2,000

7% Preference Share Capital                                                                                               1,500

General Reserve                                                                                                                      300

Cash and cash equivalents                                                               432

9,668                             9,668

Additional Information

1 Clerical and management staff were awarded a bonus amounting to £4,000 in mid-December 2014. This bonus has not been paid yet and it should be classified as an administrative expense.

2     Rent & Rates include £8,000which relates to the coming year.

3     Closing inventory at 31 December 2014 was valued at £280,000.

4     It is estimated that corporation tax of £8,000 will be payable on the profits for the year.

5     Preference Dividend should for theyear should be provided in full.

6     An Ordinary Dividend of 15p per share is proposed.

7     The directors propose to provide for the depreciation of non-current assets for the year as follows:

Fixtures and Fittings           @ the rate of 20% per annum using the straight-line method

Motor Vehicles                    @ the rate of 20% per annum using the straight-line method

8   Transfer £8,000 to the General Reserve.

Pro forma layout

Please note that this pro forma provides a guide to the structure and presentation ofthe financial statements - it is not an exhaustive list of all possible items.

BEST EVER Ltd

Income Statement for year ending

 

£000

£000

Revenue

 

 

Less Cost of Goods Sold:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

 

 

 

Less Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit on ordinary activities before taxation

 

 

Taxation

 

 

Profit on ordinary activities after taxation

 

 

 

 

 

 

 

 

Less Appropriations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Financial Position as at

 

£000

£000

Non-current Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

 

 

 

 

Capital and Reserves

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Equity and Liabilities

 

 

Reference no: EM13854615

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