Math Problem Solver

QUESTION 2

KD Ltd are specialist wholesalers. This is their trial balance at 31 December 2021.

Dr Cr

Ordinary share capital: $shares 1,000,000Share premium 120,000General reserve 48,000Retained earnings as at 31.12.2020 139,750Inventory: 31.12.2020 336,720Sales 5,090,370Purchases 2,475,910Returns outwards 121,220Returns inwards 136,200Carriage inwards 6,340Carriage outwards 43,790Warehouse wages (average number of workers 59) 410,240Salespeople’s salaries (average number of workers 21) 305,110Administrative wages and salaries 277,190Plant and machinery 610,000Motor vehicle hire 84,770Provisions for depreciation: plant and machinery 216,290General distribution expenses 27,130General administrative expenses 47,990Directors’ remuneration 195,140Ordinary dividend 375,000Rents receivable 37,150Accounts receivable 1,623,570Cash at bank and in hand 179,250Accounts payable (payable before 31.3.2022) 304,570Bills of exchange payable (payable28.2.2022) 57,000 7,134,350 7,134,350Notes:(a) Inventory at 31.12.2021: $412,780, consists of goods for resale.

(b) Plant and machinery is apportioned: distributive 60 per cent; administrative 40 per cent.

(c) Accrue auditors’ remuneration: $71,000.(d) Depreciate plant and machinery: 20 per cent on cost.(e) Of the motor hire,$55,000 is for distributive purposes.

(f ) Corporation tax on profits, at a rate of 35 per cent, is estimated at $238,500, and is payable on 01 October 2022.(g) All of the sales are of one type of goods. Net sales of$3,620,000 have been made in the Zimbabwe with the remainder in Africa, and are shown net of VAT.

(h) Pension contributions for staff amounted to $42,550 and social security contributions to$80,120. These figures are included in wages and salaries in the trial balance. No employee earned over $30,000.( i) Plant of$75,000 had been bought during the year.

( j) Directors’ remuneration has been as follows:

$Chairman 46,640Managing Director 51,500Finance Director 46,000Marketing Director 43,000 187,140In addition, each of them drew$2,000 as directors’ fees. Pensions are the personal responsibility of directors.

Required:

In accordance with IAS 1 presentation of financial statements, prepare:

i) The statement of profit or loss and other comprehensive income for the ending 31 December 2021. [13 marks]

ii) The statement of financial position as at 31 December 2021. [12 marks]

[Total: 25 Marks]