Financial Statement help

littleangelww

Can anyone tell me how they got the admin expenses, distribution costs and property, plant and equipment figure?

Willow Ltd
Data
You have been asked to help prepare the financial statements of Willow Ltd for the year ended 30 June X1. The company’s trial balance as at 30th June X1 is shown below.
Willow Ltd
Trial Balance as at 30th June X
Debit Credit
£000 £000
Share capital 50,000
Share premium 25,000
Revaluation reserve at 1 July X0 10,000
Land & building – value/cost 120,000
Accumulated depreciation at 1 july X0 22,500
Plant and equipment – cost 32,000
Accumulated depreciation at 1 july X0 18,000
Trade and other receivables 20,280
Trade and other payables 8,725
5% bank loan repayable X5 20,000
Cash and cash equivalents 2,213
Retained earnings at 1 July X0 12,920
Sales 100,926
Purchases 67,231
Distribution costs 8,326
Administrative expenses 7,741
Inventories at 1 July X0 7,280
Dividends paid 3,000
268,071 268,071
Further Information
• The inventories at the close of business on 30th June X1 cost £9,420
• Depreciation is to be provide for the year to 30th June X1 as follows:

Buildings 4% per annum Straight line basis
This should all be charged to administrative expenses.
Plant and equipment 20% per annum Reducing balance basis
This is to be apportioned as follows:
Cost of sales 70%
Distribution costs 20%
Administration expenses 10%

Land which is non-depreciable, is included in the trial balance at a value of £40,000 it is to be revalued to £54,000 and this revaluation is to be included in the financial statements for the year ended 30th June X1
• It has been decided to write off a debt of £540 which will be charge to administrative expenses.
• Included within distribution costs is £2,120 relating to an advertising campaign that will run from 1 January X1 to 31 December X1
• The loan interest has not yet been accounted for.
• The corporation tax charge for the year has been calculated as £2,700
• All of the operations are continuing operations
(a) Draft the statement of comprehensive income for Willow Ltd for the Year ended 30th June X1
(b) Draft the statement of financial position for Willow Ltd as at 30th June X1

The answers have the administration costs as £11,761
Distribution costs at £7,826
Property, plant and equipment at £119,500

CeeJaySix

Hi Angel,

Admin expenses 7,741
Land & buildings depn @ 80,000 x 4% = 3,200 (Land makes up 40,000 of the total 120,000 land and buildings, and is non-depreciable)
Plant and eqpt depn @ (32,000 - 18,000) x 20% x 10% = 280 (it's reducing balance basis so take off depreciation b/f before calculating charge for year)
Bad debt write-off = 540
= 11,761

Distro costs 8,326
Plant and eqpt depn @ (32,000 - 18,000) x 20% x 20% = 560
Less advertising 1,060 (only six months in year - the other six months would be a credit here and a debit to prepayments)
= 7,826

Land and buildings 120,000
Less acc depn 22,500
Less depn for year on buildings (see Admin expenses for calc) 3,200
Add reval on land 14,000
P&M 32,000
Less acc depn 18,000
Depn @ 20% of 14k = 2,800
= 119,500

Hope that helps!

littleangelww

Thank you that has helped!!! I've gone on to do the rest but can't get the figure for trade and other payables. The answer is 9,725. Do you know how that one is worked out?

Lucy_M

Hi,

I think it's the accrual for the loan (5% of 20,000 = 1,000) 8,725 + 1,000 = 9,725
The accrual is a liability so it's added to the Trade and other Payables figure.

Hope that helps too!
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