Question

    CLIFTON PHARMA LIMITED                  
                      
   The following trial balance relates to Clifton Pharma Limited for the financial year ended 30 September 2018, assume you are working as an Accounts Executive in this Company.                  
                      
                      
                      
                      
       "Dr.
£"   "Cr.
£"          
   Cost of sales   134,000               
   Operating Expenses   35,000               
   Loan interest paid (see note 1)   1,500               
   Rental of vehicles (see note 2)   7,000               
   Revenue       338,300           
   Investment income       2,000           
   Leasehold property at cost (see note 4)   250,000               
   Plant and machinery at cost   197,000               
   Accumulated depreciation at 1 October 2017:                  
   Leashold property       40,000           
   Plant and equipment       47,000           
   Investments   94,000               
   Share capital       280,000           
   Share premium       20,000           
   Retained earnings at 1 October 2017       19,300           
   Loan notes (see note 1)       50,000           
   Deferred tax balance at 1 October 2017 (see note 5)       20,000           
   Inventory at 30 September 2018   23,700               
   Trade receivables   76,400               
   Trade payables       14,100           
   Bank   12,100               
       830,700    830,700           
                      
   The following information is relevant for the preparation of financial statements for the year ended 30 September 2018:                  
                      
                      
1)   The effective interest rate on the loan notes is 6% per year.                  
                      
2)   A recent review by the finance department of lease contract has reached the conclusion that £ 7,000 was paid: the lease agreement is for a four-year period in total, and there will be three more annual payments in advance of £ 7,000, payable on 1 October in each year. The vehicles in the lease agreement had a fair value of £ 24,000 at 1 October 2017 and they should be depreciated using the straight line method to a nil residual value. The interest rate implicit in the lease is 10% per year.                  
                      
                      
                      
                      
3)   Other plant and equipment is depreciated at 20% per year by the reducing balance method.                  
   All depreciation of property, plant and equipment should be charged to cost of sales.                  
                      
4)   The leashold property has a 25 - year life and is amortised at a straight-line rate. On 30 September 2018 the leasehold property was revlaued to £ 220,000 and the directors wish to incorporate this revaluation in the financial statements.                  
                      
                      
                      
5)   The provision for income tax for the year ended 30 September 2018 has been estimated at £ 18,000. At 30 September 2018 there are taxable temporary differences of 92,000. The rate of income tax on profits is 25%                  
                      
                      
Required:                      
                      
a)   Prepare a statement of Profit or Loss for the year ended 30 September 2018 .                  
                      
b)   Balance Sheet as at 30 September 2018                  
                      

Answer 1

csps Page Ne. Pel Alc Particular Rs particular To cost of Sale 1 134000 By Revenue 338300 To operating Expenses 35000 By Investment income 2000 To Rent on vehicles 7000 By Inventory 23700 To Interest on Loan To Depreciation on pem 1500 39400 To Net Profit 147/00 364ooo 136 Yooo

- Balance sheet Libbilities Loon ( 1500x. loo Share capital I share Premium Retain Forning Trade Payble Het Profit Rs Assets TRS. 25000 Plant & Machinery boo (1,97000-39 Yoo) 157600 280000 Leased hold Property 2.50000 I 20000 Investment | Yooc 19300 Inventory 23700 I loo Trade Receivable 76 400 147100 Bank 12100