Intermediate Accounting Exercise I

Portsmere

Dr Cr $000$000

Intangile assets 50Plant at cost 176Plant,accumulated depreciation,at 1 June 200888Building at cost 592Buildings,accumulated depreciation,at 1 June 200848Land at cost 188Bank balance 30Retained earnings at 1 June 200810410% Loan note 40Loan note interest paid 4Dividends paid 20Revenue 1,510Return inwards 28Wages and salaries 144Insurance 14Energy expense 70Inventory at 1 June 2008128Administrative expenses 64Allowance for receivables,at 1 June 20088Purchases 884Discounts received 76Trade payables 200Trade receivables 256Director's remuneration 56$1 Ordinary shares 570Share premium account 60

2,7042,704Additional information as at 31 May 2009

(1) Closing inventory has been valued at $60,000.

(2) Energy expenses of $12,000 for May 2009 have not been invoiced or recorded.(3) Insurance expenses include $2,000 for June and July 2009.

(7) Land was revalued at 31 May 2009 to $200,000

(9) Tax has been calculated as $40,000 for the year.

(10) The expenses listed below should be apportioned as indicated:

Discounts received Insurance

Energy expenses Wages and salaries

Director's remuneration

(8) The intangible assets were purchased on 1 December 2008 and have a useful life of five years fromthat date. Amortization is calculated on a monthly basis and Cost of Sales

Distribution Cost

Administrative Exp.

You are presented with the following trial balance of Portsmere,a limited liability company,

at 31 May 2009.

(4) The allowance for receivables is to be increased to 5% of trade receivables.The increase should be charged to administrative expenses.

(5) Plant is depreciated at 25% per annum using the reducing balance method. The entire charge is to be allocated to cost of sales.

(6) Building are depreciated at 5% per annum on their original cost, allocated 50%to cost of sales, 30% to distribution costs and 20% to administrative expenses.--100%-50%50%100%

50%20%30%40%35%25%--

Portsmere

Statement of Comprehersive Income

For the year ended 31, May 2009

$000

Net sale(W1)：1482

Cost of sales(W2):(1087.4)

Gross profit:394.6

Distribution expense(W3)：(81.68)

Administrative expense(W4):(126.32)

Finance cost:(4)

Profit before tax:182.6

Taxation(40)

Profit for the year:142.6

Other comprehersive income:

Gain on the property12

Total comprehersive income for the year:$154.6

Portsmere

Statement of Financial Position

At the 31, May 2009

Asset:$000$000

Non-current asset:

Property, plant and equipment(net)(W5):780.4

Intangible asset:45825.4 Current asset:

Cash and cash equivalent:30

Prepayment:2

Trade and other receivable(W6):243.2

Invenroty:60335.2 Total assets:$1,160.6 Liability and Equity:

Non-current liability:

10% Loan note:4040 Current liability:

Trade and other payable(W7):212

Taxtion payable:40252 Total liability292 Equity:

Retained earning:246.6

$1 Ordinary shares:570

Share premium:60

Dividend:(20)

revaluation reserve:12868.6 Total liability and equity:$1,160.6

Workings:

W1:Revenue:1510 Return inwards:-28

1482 W2:Inventory at 1 June 2008:128 Purchase:884

Inventory at 31 May 2009:-60

Plant dep'n:(178-88)*25%22

Building dep'n:592*5%*50%14.8

Energy exp.:(70+12)*50%41

Wages and salaries 144*40%57.6

1087.4 W4:Administrative exp.:64 Building dep'n:592*5%*20% 5.92

Amortization:50/(5*12)*65

Discounts received:-76

Insurance:(14-2)*50%6

Energy exp.:(70+12)*30%24.6

Wages & salaries:144*25%36

Director's remuneration:56

Bad debts exp.: 4.8

126.32 W3:Building dep'n:592*5%*30%8.88 Insurance:(14-2)*50%6

Energy exp.:(70+12)*20%16.4

Wages and salaries:144*35%50.4

81.68

W5:Plant(cost):176 Acc' dep'n:88+(176-88)*25%-110

Building(cost):592

Acc' dep'n:48+592*5%-77.6

Land(revaluation):200

780.4 W6:Trade rececivable:243.2 256*(1-5%)

W7:Trade payable:200 Acc' payable:12

212