I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

PART F: PREPARING BASIC FINANCIAL STATEMENTS 

 

360

 

QUESTION 

Internal accounts

 

The accountant of Zabit Co has prepared the following trial balance as at 31 December 20X7. 

 

  $'000 

50c ordinary shares (fully paid) 

350 

7% $1 preference shares (fully paid) 

100 

10% loan stock (secured) 

200 

Retained earnings 1.1.X7 

242 

General reserve 1.1.X7 

171 

Land and buildings 1.1.X7 (cost) 

430 

Plant and machinery 1.1.X7 (cost) 

830 

Accumulated depreciation 

 

 Buildings 

1.1.X7 

20 

  Plant and machinery 1.1.X7 

222 

Inventory 1.1.X7 

190 

Sales 

2,695 

Purchases 

2,152 

Preference dividend 

7 

Ordinary dividend (interim) 

8 

Loan interest 

10 

Wages and salaries 

254 

Light and heat 

31 

Sundry expenses 

113 

Suspense account 

135 

Trade accounts receivable 

179 

Trade accounts payable 

195 

Cash 

126 

Notes 

1 

Sundry expenses include $9,000 paid in respect of insurance for the year ending 1 September 

20X8. Light and heat does not include an invoice of $3,000 for electricity for the 3 months 

ending 2 January 20X8, which was paid in February 20X8. Light and heat also includes $20,000 

relating to salespeople's commission. 

2 

The suspense account is in respect of the following items. 

 

$'000 

Proceeds from the issue of 100,000 ordinary shares 

120 

Proceeds from the sale of plant 

 300 

 

420 

Less consideration for the acquisition of Mary & Co 

 285 

 

 135 

3 

The net assets of Mary & Co were purchased on 3 March 20X7. Assets were valued as follows. 

 

$'000 

Investments 

231 

Inventory 

   34 

 

 265 

All the inventory acquired was sold during 20X7. The investments were still held by Zabit at 

31.12.X7. 

4 

The property was acquired some years ago. The buildings element of the cost was estimated at 

$100,000 and the estimated useful life of the assets was 50 years at the time of purchase. As at 

31 December 20X7 the property is to be revalued at $800,000. 

5 

The plant which was sold had cost $350,000 and had a carrying amount of $274,000 as at 

1.1.X7. $36,000 depreciation is to be charged on plant and machinery for 20X7. 

6 

The loan stock has been in issue for some years. The 50c ordinary shares all rank for dividends at 

the end of the year. 

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CHAPTER 20  

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  PREPARATION OF FINANCIAL STATEMENTS FOR COMPANIES