Total mark 37.

5
Earle plc's trial balance as at 31 October 20X8 is shown below.
£'000 £'000
Ordinary share capital (£1 shares)   15,000
Share premium 3,750
Trade payables   2,099
Land and buildings – cost   26,364
Land and buildings – accumulated depreciation at 1 November 20X7 5,250
Plant and equipment – cost   9,375
Plant and equipment – accumulated depreciation at 1 November 20X7 5,550
Trade receivables   4,077
Accruals at 31 October 20X8   327
8% bank loan repayable in 10 years   11,250
Cash at bank   7,331
Retained earnings   7,351
Interest paid   450
Gross profit   11,728
Distribution costs   4,082
Administrative expenses   3,592
Closing inventories 5,909
Dividends paid   1,125  
62,305 62,305

Further information
(1) Depreciation is to be provided for the year as follows:
Buildings 2% per annum Straight line basis
Plant and equipment 20% per annum Reducing balance basis
Depreciation is apportioned as follows:
%
Distribution costs 60
Administrative expenses 40
Land, which is non-depreciable, is included in the trial balance at a cost of £11,364,000.
(2) The company began a series of television adverts for the company's range of products on 1 October 20X8 at a cost of
(3) Interest on the bank loan for the last six months of the year has not been included in the accounts in the trial balance.
(4) The corporation tax charge for the year has been calculated as £728,000.
(5) During the year Earle plc rented some additional warehouse space. Earle plc have paid rent until 31 December 20X8.
(6) Earle plc made a 1 for 5 bonus share issue during the year from share premium. The bonus issue has not yet been acc
(7) Volan plc is a customer of Earle plc with a debt of £35,000. On 29 October 20X8, Earle plc received a letter from the liq
(8) An item of plant and equipment was damaged in a flood on 30 October 20X8. At 31 October 20X8 the carrying amount
(9) A payment sent to a supplier for £69,000 has been incorrectly recorded as £96,000.
Requirement
Prepare the statement of profit or loss for Earle plc for the year ended 31 October 20X8 and the statement of financial position
Statement of profit or loss for the year ended 31 October 20X8
£
Gross profit 11,728
Distribution costs (4,724)
Administrative expenses (4,068)
Profit / (loss) from operations 2,936
Finance costs (900)
Profit / (loss) before tax 2,036
Income tax expense (728)
Profit / (loss) for the year 1,308
Statement of financial position at 31 October 20X8
 £
ASSETS
Non-current assets
Land and buildings 20,814
Plant and equipment 3,045
Current assets
Inventories 5,909
Trade receivables 4,042
Prepayments 8
Cash and cash equivalents 7,358
Total assets 41,176

EQUITY AND LIABILITIES

1 October 20X8 at a cost of £33,000. The adverts were to run for three months and were to be paid for in full at the end of December 20X8.
counts in the trial balance.

t until 31 December 20X8. The annual rent is £48,000 and is charged to distribution costs.
s issue has not yet been accounted for.
received a letter from the liquidator of Volan plc to advise that the debt would not be paid. No accounting has taken place in respect of irrec
r 20X8 the carrying amount of the item (after deducting depreciation for the year) was £55,000, the value in use was assessed as £36,000

tement of financial position at that date.

place in respect of irrecoverable debts. Irrecoverable debts should be charged to administration costs.
as assessed as £36,000 and the far value less disposal costs was £40,000. Impairment is charged to administration costs.