Seminar 2
Ash plc is a construction company. Its trial balance at 30 September 2018 was as
follows:
| Dr £’000 |
Cr £’000 423,000 |
Sales |
| Cost of sales | 282,000 | |
| Contract costs | 103,000 | |
| Operating expenses | 13,000 | |
| Dividends paid | 4,500 | |
| Interest charges | 7,500 | |
| Taxation charge | 2,000 | |
| Property, plant and machinery cost Progress payments received from customers |
1,053,000 | 61,000 |
| Property, plant and machinery depreciation provision | ||
| at 1 October 2017 | 632,000 | |
| Supplier accounts | 37,000 | |
| Corporation tax liability | 1,500 | |
| Bank overdraft | 55,500 | |
| Loans repayable 2022-2024 | 40,000 | |
| Issued share capital (50p ordinary shares) | 75,000 | |
| Proceeds on issue of shares | 50,000 | |
| Retained earnings at 1 October 2017 | 90,000 ________ £1,465,000 |
________ £1,465,000 |
| i) | During the year ended 30 September 2018 the company issued a further 50,000,000 50p ordinary shares at a price of £1 per share. There were no additions to property, plant and equipment during the year. |
| ii) |
The company have been charging depreciation at 5% on a straight-line
basis. At 1 October 2017 the directors decided to revalue the property,
plant and equipment at £550m. At that point in time they estimated its
remaining useful life at 25 years. The trial balance does not yet incorporate
any of these adjustments
iii) The company had one contract in progress at the year end with a selling
price of £250m. This is due to complete in 2019. No profit has been taken
on the contract in the income statement since its commencement in 2017.
Costs to complete are estimated at £17m. Work certified on the contract
since its commencement amounted to £200m. The directors are now fully
confident about the final outcome of the contract. The company’s
accounting policy is to recognise profit in the income statement on a stage
of completion basis, calculated on the basis of work certified.
REQUIRED:
Prepare an income statement and changes in equity statement for the year ended 30
September 2018 in addition to a balance sheet at that date suitable for presentation
to the shareholders.
The post company have been charging depreciation appeared first on My Assignment Online.