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Question: The adjusted trial balance of Sunny Ltd as at 30 June 2017 is as follows:    …
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The adjusted trial balance of Sunny Ltd as at 30 June 2017 is as
follows:     

Sunny Ltd     Debit     Credit
        $          $
Accounts
receivable
1,350,000
Asset revaluation
reserve as at 1/7/2016
344,000
Asset
revaluation reserve (revaluation increment on 17 /06/2017)
140,000
Asset
revaluation reserve (revaluation increment on 30/06/2017)
28,000
Accumulated
amortisation – patents & trademarks
25,000
Accumulated
impairment loss – goodwill
   180,000
Accumulated
depreciation –
Plant &
machinery
206,000
Fixtures &
fittings
47,000
Buildings 40,000
Administrative
staff salaries expense
540,000
Advertising
expense
120,000
Bank
loan (unsecured –short-term repayable due)
40,000
Bank
loan (unsecured –long-term repayable amount)
160,000
Carrying amount of
plant and machinery sold
24,000
Cost of sales 3,424,000
Deposits at
call
120,000
Dividends
revenue
43,000
Deferred tax
asset
210,000
Debentures held in
Emerald Ltd (mature on 30/5/2018)
214,000
Dividends
receivable
8,000
Freight
inwards
90,000
Freight
outwards
115,000
Ordinary shares,
fully paid
3,654,000
General
reserve
680,000
Goodwill 732,000
Retained profits
as at 1/7/2016
750,000
Mortgage loan
(secured over land and buildings – due 30/9/2020)
254,000
Accounts
payable
472,000
Current tax
liabilities
156,000
Provision for long
service leave -short term liable
100,000
Provision for long
service leave – long term liable
150,000
Deferred tax
liability
103,000
Allowance for
doubtful debts
77,000
Provision for
annual leave
62,000
Freehold land (at
fair value)
1,276,000
Buildings (at fair
value)
900,000
Long term
investment in listed shares as at 1/7/2016
60,000
Long
term investment in listed shares (revaluation increment on
30/06/2017)
40,000
Loan to Charlie
Ltd (due on 30/6/2020)
220,000
Patents and
trademarks
125,000
Plant &
machinery – at cost
684,000
Preference shares,
fully paid
240,000
Prepayments 40,000
Inventories 1,950,000
Income tax
expense
381,000
Final dividend
payable
200,000
Fixtures &
fittings – at cost
118,000
Cash at bank 530,000
Sales revenue 6,600,000
Sundry
revenue
46,200
Sales returns and
allowances
12,000
Sales staff
salaries and commission expense
500,000
7% debentures –
due 30/4/2018 (secured over inventories)
85,000
Proceeds on sale
of plant and machinery
40,000
Other
administrative expense
370,000
Other selling
expense
210,000
Interest
expense
68,000
Other
expenses
122,000
Underwriting
commission and other share issue costs
47,000
Interest
revenue
50,000
Interest
payable
9,000
Transfer to
general reserve
50,000
Interim dividend
paid – ord
131,200
Final dividend
declared – ord
164,000
Final dividend
declared – pref
36,000
Total 14,981,200 14,981,200

Prepare a statement of profit and loss & other
comprehensive income, a statement of financial position and a
statement of change in equity

Additional information:

i)         
Included in other administrative expense were:

fees paid to auditor:

                       
25% for audit & review of financial reports

                       
75% for non-audit consulting
services)                                                         
                                                                                               
                       
$60,000

fees paid to related practice of the auditor (for

legal
services)                                                             
$12,000

ii)         Inventories,
$1,950,000, comprised of:

Raw material – at
cost                                                     
$70,000

Work in progress – at cost
                                             
800,000

Finished goods – at
cost                                      
         1,054,000

Finished goods – at net realisable
value                           
26,000

Finished goods are valued at the lower of cost and net
realisable value on a weighted average basis.

iii)        Contributed
equity as at 1 July 2016 consisted of:

                                                                                                           
           

2,000,000 ordinary shares issued at $1 each, fully
paid              
      $ 2,000,000

100,000 15 % preference shares issued at $2.40 each, fully
paid                       
240,000

45,000 share
options                                           
   
                   
           
  22,500

iv)        On 14 July 2016, a
rights issue of 1,280,000 ordinary shares were made at $1.25 each.
The underwriting commission and other shares issue costs for the
issue amounted to $15,000. The shares issued ranked equally with
existing shares for dividend.

v)         On 29 May
2017, the 45,000 share options were exercised and 45,000 ordinary
shares were allotted at an exercise price of 70 cents each. The
allotted shares did not rank for dividend until 2018.

vi)        On 17 June 2017,
freehold land was revalued to its fair value of $1,276,000 from its
carrying amount of $1,076,000. The related deferred tax has been
accounted.

vii)       On 28 June 2017, Sunny
entered into a contract with Magnet Ltd for the construction of
three new machines at a cost of $245,000 each. The company expects
to take delivery of the first machine in January 2018, and the rest
in February 2019.

viii)      On 30 June 2017, listed
investments were revalued to their fair value. They were purchased
at a cost of $60,000 in May 2016 and are classified as long-term
investments in equity instruments. The related deferred tax
liability had been accounted.

Note: Loan receivables and held-to-maturity investments (such as
debentures held in another entity) are to be classified as other
financial assets.

ix)        An amount of
$50,000 was transferred to general reserve from retained
earnings.

x)         Accounting
policies adopted are consistent with those of the previous
year.

xi)        Tax rate is
30%

WHAT IS GIVEN:

Sunny Ltd
Statement of Profit or Loss
and Other Comprehensive Income
For the year ended
30/06/2017
Revenue
Cost of sales
Gross profit
Other revenue
Other income
Selling costs
Administration costs
Other expenses
Finance costs
Profit before income tax
Income tax expense
Profit for the period
Other comprehensive income:
Items that will not be reclassified to
profit or loss
Gain arising during the year on
revaluation of land
200,000
Gain arising during the year on
investments in equity instruments
40,000
Income tax relating to items not
reclassified
( 72,000)
Other comprehensive income during the
year, net of tax
168,000

Total comprehensive income for the year

Sunny Ltd
Statemnet of Financial
Position
as at 30 June 2017
Current Assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Inventories Note 9
Total Current Assets
Non-Current Assets
Investments in equity instruments
Other financial assets
Property, plant and equipment
Goodwill
Other intangible assets
Deferred tax assets 107,000
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Short-term provisions
Short-term borrowings
Current portion of long-term borrowings 40,000
Current tax liabilities
Total Current Liabilities
Non-Current Liabilities
Long-term borrowings Note 17
Long-term provisions
Total Non-Current Liabilities
Total Liabilities
Net assets
Equity
Contributed capital
Reserves 1,192,000
Retained earnings
Total Equity

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