Leagrave Ltd is a wholesaler of bags and accessories that has been operating for
ID: 2596325 • Letter: L
Question
Leagrave Ltd is a wholesaler of bags and accessories that has been operating for a number of years. The ledger of Leagrave Ltd. contains the following account balances as at 31 May 2017, the end of the financial year.
LEAGRAVE Ltd
TRIAL BALANCE AS AT 31 MAY 2017
Debit
Credit
€
€
Property, at cost
120,000
Equipment, at cost
80,000
Accumulated depreciation (as at 1 June 2016)
on property
20,000
on equipment
38,000
Purchases
235,000
Sales
402,200
Inventory, as at 1 June 2016
50,000
Wages and salaries
58,800
Selling expenses
22,600
Loan interest
5,100
Other operating expenses
17,700
Trade payables
36,000
Trade receivables
38,000
Cash in hand and at bank
1,600
Dividends paid
24,000
17% long-term loan
30,000
Ordinary shares €1, as at 1 June 2016
80,000
Retained profits, as at 1 June 2016
46,600
652,800
652,800
The following additional information as at 31 May 2017 is available:
Closing inventory has been valued at cost at €42,000.
Depreciation for the year ended 31 May 2017 has still to be charged as follows: Property: 1.5% per annum using the straight-line method
Equipment: 25% per annum using the reducing balance method
Required:
1) Prepare Leagrave Ltd.’s Statement of Profit and Loss and the Statement of Changes in Equity for the year ended 31 May 2017 and the Statement of Financial Position as at that date. Provide the statements with proper headings. (Ignore Taxation)
LEAGRAVE Ltd
TRIAL BALANCE AS AT 31 MAY 2017
Debit
Credit
€
€
Property, at cost
120,000
Equipment, at cost
80,000
Accumulated depreciation (as at 1 June 2016)
on property
20,000
on equipment
38,000
Purchases
235,000
Sales
402,200
Inventory, as at 1 June 2016
50,000
Wages and salaries
58,800
Selling expenses
22,600
Loan interest
5,100
Other operating expenses
17,700
Trade payables
36,000
Trade receivables
38,000
Cash in hand and at bank
1,600
Dividends paid
24,000
17% long-term loan
30,000
Ordinary shares €1, as at 1 June 2016
80,000
Retained profits, as at 1 June 2016
46,600
652,800
652,800
Explanation / Answer
Profit and Loss Statement Particulars Details $ Amount in $ Particulars Details $ Amount in $ Opening stock $ 50,000 sales $ 402,200 Purchases $ 235,000 Wages and salaries $ 58,800 Selling expenses $ 22,600 Closing Stock $ 42,000 Loan interest $ 5,100 Other operating expenses $ 17,700 Depreciation $ 12,300 Net Profit $ 42,700 Total $ 444,200 Total $ 444,200 Statement of Changes in Equity Particulars Details $ Amount in $ Particulars Details $ Amount in $ Opening balance $ 46,600 Dividend Paid $ 24,000 Profit $ 42,700 Closing Balance $ 65,300 Total $ 89,300 Total $ 89,300 Balance sheet Liabilities and Equity Details $ Amount in $ Assets Details $ Amount in $ Share capital $ 80,000 Property $ 120,000 Reatined Earnings $ 65,300 Less : Accu Dep $ (20,000) Less : Current year Dep $ (1,800) $ 98,200 Equipment, at cost $ 80,000 Less : Accu Dep $ (38,000) Trade payable $ 36,000 Less : Current year Dep $ (10,500) $ 31,500 17% long-term loan $ 30,000 Trade receivable $ 38,000 Cash in hand $ 1,600 Inventory in hand $ 42,000 Total $ 211,300 Total $ 211,300
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