Question

SECTION B Answer question 2 and not more than one further question from this section 2 The following is the trial balance of Twist Ltd. at 31 December 2012 100,000 30,000 150,000 13,000 75,000 12,650 6,600 1.250 860 5.948 656 Authorised, issued and called-up capital 100.000 equity shares of El cach 60,000 7% redeemable preference shares of 50p each Freehold buildings: cost Freehold buildings: accumulated depreciation Plant and machinery cost Plant and machinery accumulated depreciation Development costs (cost £10,000) Interim dividend paid Provision for doubtful debts Wages and salaries Bad debts written off Goodwill Listed investments Purchases / Sales Formation expenses Directors' remuneration Returns inwards / outwards Insurances Dividends received Retained earnings Light and heat Audit fee General reserve Share premium 10% debentures Inventories, as at 1 January 2012 Trade receivables / payables Bank 10.000 4,873 78 493 130,846 250 13,000 1.629 596 1,834 310 3,522 1,520 764 30,900 5,600 30,000 9,436 11,600 8,450 3.643 £371,615 £371,615 Question continues on next page University of London 2013 UL13/0001 Page 3 of 12

Answer 1

Twist Limited
Income Statement
For the period 1st Jan 2012 to 31st Dec 2012
	Net Sales	129,217
	Total Revenue		129,217
	Cost of Good Sold	73,639
	Wages & Salaries	5,948
	Provision for doubtful debt	376
	Formation expenses (250-250 written off against reserve)	-
	Director's remuneration	13,000
	Insurance (500-200 prepaid expense)	396
	Light & Heat (1520+330 electricity not accounted)	1,850
	Audit Fee	764
	Depreciation - Building (150,000 Cost/50 years)	3,000
	Depreciation - Plant & Machinery (75,000-12,650)*20%	12,470
	Depreciation - Development Cost (10000*10%)	1,000
	Interest on Debenture	3,000
	Total Expenses		115,443
	Profit from business		13,774
Add	Other Income
	Dividend Received		310
	Profit after other Income		14,084
Less :	Taxes		2,544
	Profit after Taxes		11,540
Less :	Preference share dividend		2,100
Less :	Dividend on Common Stock (100,000*0.0625)		6,250
	Profit after Dividend		3,190
Less :	Transfer to general reserve		4,000
	Deficit transferred to Retained Earning		(810)

Working Notes :

Calculation of net Sales
Sales	130,846
Less : Sales Return	1,629
Net Sales	129,217

Calculation of Cost of goods sold
Inventory Beginning	9,436
Add : Purchase	78,493
Less : Purchase return	1,834
Less : Closing Balance of Inventory	12,456
Cost of Good Sold	73,639

Calculation of net Sales
Sales	130,846
Less : Sales Return	1,629
Net Sales	129,217