You are presented with the trial balance of CWS Limited for the year ended 31 December 2007.
Dr
Cr
$000
$000
Accumulated profits
2,100
Administrative expenses
5,600
Allowance for receivables
250
Buildings
3,500
Buildings accumulated depreciation
1,000
Cash at bank and in hand
400
Distribution costs
1,500
General reserve
2,080
Land
4,900
Motor vehicles cost
240
Motor vehicles accumulated depreciation
60
$1 ordinary shares
3,000
Ordinary shares dividends
100
Opening inventory
14,100
Purchases and sales
35,000
55,000
Share premium
600
Returns
170
200
8% Loan Notes
2,000
loan notes interest
80
Trade Accounts Receivable and Trade Accounts Payable
2,900
2,200
68,490
68,490
Notes
1. Motor vehicles are to be depreciated by 20% using the reducing balance method.
The depreciation charge is to be treated as a distribution cost.
2. Buildings are to be depreciated by 4% using the straight-line method. The
depreciation charge is to be treated as an administrative expense.
3. The closing inventory was valued at $12,800,000.
4. Income Tax was estimated at $2,000,000.
5. Distribution costs prepayments were $100,000.
6. The provision for irrecoverable debts is to be adjusted to 5% of the tradereceivables. The change is to be included in the administrative expenses.
7. $100,000 is to be transferred from the accumulated profits to the general reserve.
Required
Prepare an Income Statement for CWS Limited, for the year ended 31 December 2007, and a Statement of financial position as at that date.(Total 25 marks)
