Unit 1: May 2002 Question#2

Note 2:
The bank loan will be recorded as follows:
$6,250 will be recorded under the Current Liabilities section of the Statement of Financial Position as this portion is due to be paid in less than 1 year.
The balance $25,000, ($31,250-$6,250) will be recorded under the Non Current Liabilities section of the Statement of Financial Position as this portion is not due to be paid in less than 1 year.

Note 3:
Dividends due on investments – 30¢ x $25,000 = $7,500. This would be added to the dividends from investments balance of $3,500 as this is dividends receivable. Therefore the total for the Statement of Comprehensive Income would be $11,000 i.e. ($3,500+$7,500) and the dividends receivable of $7,500 will appear in the Statement of Financial Position under Current Assets. 

Note 5:
The amount of $80,000 is now a "bad debt to be written off" therefore:
Double entry: Debit        Bad Debt Expense Account         $80,000
                          Credit          Accounts Receivables  Account  $80,000

Note 6:
The balance of $50,000 due to this supplier will be recorded as follows:
$20,000 will be recorded under the Current Liabilities section of the Statement of Financial Position as this portion is due to be paid in less than 1 year.
The balance of $30,000, ($50,000-$20,000) will be recorded under the Non Current Liabilities section of the Statement of Financial Position as this portion is  not  due to be paid in less than 1 year.

Note 7:
Corporation Tax expense is 35% of profit Before Interest and Taxation = 35% x $83,886 = $29,360.This figure will be recorded under the Current Liabilities section of the Statement of Financial Position as it is a liability.

Note 8:
Ordinary dividends – 25¢ x [[$500,000/ $1] = 25¢ x 500,000 shares = $125,000. ​This figure will be recorded under the Current Liabilities section of the Statement of Financial Position as it is proposed dividends to be paid.

Note 9:
Debenture interest – 10% x $187,500 = $18,750. This figure will be recorded under the Current Liabilities section of the Statement of Financial Position as it is an accrual.

Note 10:
Depreciation on Plant and Machinery: 20% x [$1,844,750-$364,375] =$296,075 per year. This is the depreciation charge for the Statement of Comprehensive Income.
Accumulated depreciation on Plant and Machinery as at September 30th, 2002 - [$364,375 + $296,075] = $660,450. This is the accumulated depreciation figure for the Statement of Financial Position.

Now that all of the additional information has been accounted for the Statement of Comprehensive Income can be prepared. 

Now that the Statement of Comprehensive Income has been completed the Statement of
Financial Position can be prepared.

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