13 FINAL ACCOUNTS
Question 15 Simpson Ltd has an Authorised Capital of 500,000 Ordinary Shares of €1 each and 200,000 6% Preference Shares of €1 each. Simpson Ltd is divided into two departments – Grocery and Clothes. The following balances were extracted from the books on 31/12/2012:
€ Buildings at Cost
Accumulated Depreciation 6% Investments 01/05/2012 Fixtures and Fittings
Accumulated Depreciation
Grocery Department Sales
Purchases Carriage In
Stock 01/01/2012
Clothes Department Sales
Purchases Carriage In
Stock 01/01/2012
Salaries and General Expenses Advertising
P & L 01/01/2012
Debtors and Creditors Insurance
Light and Heat
Provision for Bad Debts Dividends Paid 8% Debentures PAYE/PRSI Bank
Issued Capital 300,000 Ordinary Shares at €1 each 100,000 6% Preference Shares at €1 each
1,588,800
140,000 10,000 50,000 90,000 70,000 6,800
70,000 40,000 30,000
15,000
50,000 800
5,000
300,000 100,000
1,588,800
(i) Grocery stock as on 31/12/2012 was €65,000 whilst clothes stock on the same date was €53,000. This figure for groceries includes out of date stock which cost €8,000 but now has a net realisable value of 40%.
(ii) Clothes that were received on a sale or return basis were treated incorrectly as a credit purchase. The recommended retail selling price of these goods was €10,000. This was cost plus 25%.
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(iii) The figure for bank in the Trial Balance has been taken from the company’s bank account. However, a bank statement dated 31/12/2012 has arrived showing a balance of €1,200. A comparison of the bank account and the bank statement has revealed the following discrepancies: 1) €4,000 investment income was paid into the company’s bank account. 2) A credit transfer of €1,200 by a bankrupt debtor had been paid directly into the company’s bank account. This represents the first and final payment of 40c in every €1. 3) A cheque for €1,000 was issued for insurance.
(iv) Advertising includes an annual payment of €5,500 for the year ended 31/03/2013. (v) Provide for 2% depreciation on buildings at cost per annum. Buildings are to be revalued to €700,000 on 31/12/2012.
(vi) Provide for 10% depreciation on fixtures and fittings of book value per annum. (vii) Use the most appropriate basis when allocating expenses to groceries and clothes. Note: floor space is to be divided 75% and 25% to groceries and clothes respectively.
(viii) In addition: a) Provide for investment income and debenture interest due. b) Adjust provision for bad debt to 5%.
You are required to prepare a: (a) Trading and Profit and Loss Account for each department and the company for the year ended 31/12/2012. (b) Balance Sheet as at 31/12/2012.
210 100,000 500
150,000 12,000 55,000
200,000
600,000 150,000
100,000 20,000 800,000 € 12,500
TIP
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