Question

2. You work in the accounts team of Phil's Frills - a small fashion designer that manufactures clothes for the discerning gentleman. You have already started preparing the year-end accounts and have summarised the following information relating to aspects of the business over the year ending 31 December 2019. You do not currently have access to the bank account system, so you should prepare the draft accounts using the amount of cash or overdraft as an item to make the Statement of Financial Position balance. 12.000 2,640 37 34.780 36,841 234,000 50,000 165,000 76,650 61,000 26,000 Dividends Paid over the year Interest paid Interest received Inventory at end of year Inventory at start of year Land and Premises at start of year Loan Manufacturing Equipment at start of year Manufacturing expenses New Loan taken out over year Office expenses Purchase of additional manufacturing equipment (occurs at end of year) Purchases of inventory Retained Earnings reserve at start of year Revaluation Reserve at start of year Revenue Sales Expenses Share Capital Trade Payables at end of year Trade Payables at start of year Trade Receivables at end of year Trade Receivables at start of year 82,000 112.000 14.750 5,000 434 200 34,000 375,000 3.684 14,754 3454 Prepare a Statement of Comprehensive Income for the year, and a Statement of Financial Position at the end of the year. (14)

Answer 1

The answer has been divided into the following components :

1. Statement of Comprehensive Income

2. Statement of Financial Position at the end of the year.

3. Working Notes

4. Assumptions used

1. Statement of comprehensive income Phil's Frils for the year ending 31st December, 2019

Particulars	Amount(Pounds)
I. Income
Revenue	434,200
Other Income : Interest Received	37
Total Income	434,237
II. Expenses
Pur of inventory	112,000
Man expenses	76,650
Change in inventory	2061
Finance Cost : Interest Paid	2640
Operating Expenses : Office & Sales expenses	60000
Total Expenses	253,351
III. Profit before appropriations (I-II)	180,886
Less : Appropriations :
Div Paid	12000
Profit after appropriations	168,886

2. Statement of Financial Position as at 31st December, 2019

I. Equity & Liabilities
a. Equity
Share Capital	375,000
Reserves & Surplus	188636
Total	563,636
b. Liabilities
Financial Liabilities - Loan	111,000
Trade Payables	3,684
Total	114,684
TOTAL OF EQUITY & LIABILITIES	678,320
II. Assets
a. Non-Current Assets
Land and Premises	234,000
Manufacturing Equipment	247,000
Total	481,000
b. Current Assets
Trade Receivables	3,454
Inventory	34,780
Cash/Bank Balance (Balancing Figure)	159,086
Total	197,320
TOTAL OF ASSETS	678,320

3. Working Notes

i) Calculation of Reserves & Surplus :

Particulars	Amount
R&S Balance at start of the year	14,750
Revaluation Reserve	5,000
Profit during the year	168,886
Total	188,636

ii) Calculation of closing balance of Manufacturing Equipment :

Particulars	Amount
Opening Balance	165,000
Add : Purchased during the year	82,000
Less : Sales during the year	-
Less : Depreciation (Assumed to be Nil since rate is missing)	-
Total	247,000

4. Assumptions used :

a) Since rate of depreciation of manufacturing equipment is missing in the question, the same has been assumed to be Nil and hence no depreciation has been charged.

b) As given in the question, Bank balance has been taken as the reconciling balance required to balance the Statement of Financial position.