11.
You are presented with the following trial balance of Arbalrest, a limited liability company at
30 September 20X6.
Account Dr Cr
$ $
Inventory at 1st Oct 20X5 186,400
Purchases 1,648,200
Carriage inwards 38,100
Carriage outwards 47,300
Sales 3,010,000
Trade receivables 318,000
Wages and Salaries 694,200
Sundry expenses 80,000
Administrative expense 276,000
Loan interest 25,000
Allowance for Trade receivable at 1st Oct 20X5 18,800
Irrecoverable debt 14,300
Equipment at 1st Oct 20X5
- Cost 214,000
- Acc. Dep. 88,700
Land and building 1 Oct 20X5
- Cost 3,000,000
- Acc. Depn. Building 500,000
1$ Ordinary Share 1,000,000
Share premium 500,000
Retained Earnings at 1st Oct 20X5 524,000
10% loan notes 500,000
Suspense 400,000
Total 6,541,500 6,541,500
Additional information as at 31 September 20X6:
1. The balance of the suspense account is the proceeds of right issues on a 1 for 5 basis at $2 per
share, credited to the suspense account from the cash book.
2. Closing inventory at 31 Sept 20X6 was valued at $200,000 based on its original cost.
However, $50,000 of this inventory has been in the warehouse for over 2 years and the directors
have agreed to sell it in November X6 for a cash price of $32,000.
3. Sundry expenses include $9,000 paid in respect of insurance for the year ending 30 June
20X7.
4. Loan notes have existed for several years. Part of loan interest has been paid during the year.
5. Office equipment is depreciated at 20% per annum using the reducing balance method.
Building which has cost of $1,000,000 are depreciated at 5% per annum on their original cost.
At 31 Sep 20X6, the land and buildings is revalued at $3,200,000.
6. The items listed below should be apportioned as indicated:
Cost of sales Distribution costs Administrative
% % expense
%
Wages and Salaries 10 20 70
Carriage outwards - 100 -
Depreciation expense 40 10 50
Irrecoverable debt - - 100
Sundry expenses 40% 20% 40%
Required:
(a) Journalize all the adjusting entries
(b) Prepare the statement of profit or loss for the year ended 31 September 20X6.
(c) Prepare the statement of financial position as at 31 September 20X6
