Question

    BARRY LIMITED                      
                          
   Assume that you are working as a Senior Accountant in Barry Limited, your Assistants prepared draft financial statements for the year ended 30 June 2018 as follows:                      
                          
                          
   Profit or Loss for the year ended 30 June 2018                      
       £                  
   Sales Revenue   30,000                   
   Raw materials consumed    (9,500)                  
   Manufacturing overheads   (5,000)                  
   Increase in inventories of work in progress and finished goods   1,400                   
   Staff costs   (4,700)                  
   Distribution costs   (900)                  
   Depreciation   (4,250)                  
   Interest expense   (350)                  
       6,700                   
                          
   Balance Sheet as at 30 June 2018                      
       £                  
   Assets                       
   Non - Current                      
   Freehold land and buildings   20,000                   
   Plant and machinery   14,000                   
   Fixtures and fittings   5,600                   
       39,600                   
                          
   Current Assets                      
   Prepayments   200                   
   Trade receivables   7,400                   
   Cash at bank   700                   
   Inventories   4,600                   
       12,900                   
                          
   Total Assets   52,500                   
                          
   Equity and Liabilities                      
   Equity share of £ 1 each   21,000                   
   Accumulated profit   14,000                   
   Share premium   2,000                   
   Total equity   37,000                   
                          
   Revaluation Surplus   5,000                   
   Current liabilities   5,300                   
   Non-current liabilities:                      
   8% Debentures 2019   5200                  
   Total equity and liabilities   52,500                   
                          
You have also obtained the following additonal information relating to the preparation of financial statements for the year ended 30 June 2018                          
                          
                          
1)   Income tax of £ 21,000 has yet to be provided for on profits for the current year. An unpaid under-provision for the previous year's liability of £ 400 has been identofied on 5th July 2018 and has not been reflected in the draft accounts.                      
                          
                          
2)   There have been no additions to, or disposals of no- current assets in the current year but the assets under construction have been completed in the current year at an additional cost of £ 500. These related to plant and machinery.                      
                          
                          
3)   The cost and accumulated depreciation of non-current assets as at 1 July 2017 were as follows:                      
                          
       "Cost
£"   "Depreciation
£"              
   Freehold land and buildings    19,000    3,000               
   (land element £ 10,000 for 2018)                      
   Plant and machinery   20,100    4,000               
   Fixtures and fittings   10,000    3,700               
   Assets under construction   400    -                
                          
3)   There was a revaluation of land and buildings during the year, creating the revaluation surplus of £ 5,000 (land element 1,000). The effect of depreciation has been to increase the buildings charge by £ 300. Barry Limited adopts a policy of transferring the revaluation surplus included in equity to retained earnings as it is relaised.                      
                          
                          
4)   Staff costs comprise 70% factory staff, 20% general office staff and 10% goods delivery staff.                      
                          
5)   An analysis of depreciation charge shows the following:                      
           £              
   Buildings (50% production, 50% administration)       1,000               
   Plant and machinery       2,550               
   Fixtures and fittings (30% production, 70% administration)       700               
                          
Required:                          
                          
You are required to prepare the following information in a form of suitable publication for Barry limited's Financial Statements for the year ended 30 June 2018.                          
                          
                          
a)   Statement of profit or Loss                      
b)   Balance Sheet                      
c)   Reconciliation of Opening and Closing property, plant and equipment.                      
                          

Answer 1

a. Statement of Profit or loss

Particular	Amount(£)
Revenue from operations	30,000
Total Income	30,000
Expenses
Raw material consumed	9,500
Increase in inventory of WIP and Finished goods	(1,400)
Manufacturing Overhead	5,000
Staff Cost	4,700
Distribution cost	900
Depreciation	4,250
Interest Expense	350
Total Expenses	23,300
Profit Before Tax	6,700
Less: Current year tax	(2,100)
Less: Previous year liability	(400)
Profit After tax	4,200
Other comprehensive income
Revaluation surplus	5,000
Total Profit	9,200

2. Balance Sheet

Particular	Amount(£)
Asset
Non current asset
Free hold land and building	20,000
Plant and Machinery	14,000
Fixtures and fittings	5,600
Current Assets
Prepayments	200
Trade Receivables	7,400
Cash at bank	700
Inventories	4,600
Total Assets	52,500
Equity and liabilities
Equity
Equity share of £1 each	21,000
Accumulated Profit(14,000-2,100-400)	11,500
Share premium	2,000
Retained Earnings	5,000
Liabilities
Non-current liabilities
8% Debentures	5,200
Current liabilites	5,300
Provisions
Income tax provision	2,500
Total Equity and Liabilities	52,500

c. Reconciliation of Opening and closing property, plant and equipment

Particular	Freehold Land and Buildings	Plant and Machinery	Fixtures and Fittings
Asset
Opening Balance	19,000	20,100	10,000
Asset under construction		400
Total Opening Asset	19,000	20,500	10,000
Current year addition
Revaluation surplus	5,000
Asset completion		500
Closing Balance	24,000	21,000	10,000
Accumulated Depreciation
Opening	3,000	4,000	3,700
Current year depreciation	1,000	3,000	700
Total Accumulated Depreciation	4,000	7,000	4,400
Closing book value of asset	20,000	14,000	5,600