Question

The following information has been extracted from the accounting records of Knight plc: Trial Balance as at 30 September 2014 Administration costs (£000s) 120 Application monies Bank overdraft Debenture interest Deferred taxation 12 180 Fixtures (cost) Fixtures (depreciation) Inventories as at 1 October 2013 Mortgage debenture 6% 2016 Machinery (cost) Machinery (depreciation) 100 324 100 1,400 Rent, rates and insurance of factory Retained earnings at 1 October 2013 2,640 Share capital 25p ordinary shares Trade payables Trade receivables 164 Additional information: (a) he application monies represent the monies paid for a recent issue of 200,000 new shares. The issue price was 30 pence payable in full on application. No entries have yet been made in the accounting records to update the records in respect of this issue. (b) Adividend of £20,000 was paid during the year in respect of the previous financial year and the directors have proposed a dividend of £10,000 in respect of the current year (c) Depreciation is yet to be charged as follows: Fixtures depreciation is 25% on cost. Machinery depreciation is 20 % of the reducing balance (d) he tax charge is estimated as £20,000 (e) Closing inventories at 30 September 2014 are £260,000. (0) Prepare Knight pic's statement of profit or loss for the year ended 30 September 2014, its statement of financial position and its statement of changes in equity at that date. These should be in a form suitable for publication. (17 marks) (ii) Analyse and comment on the liquidity position of Knight plc. (3 marks)

Step by step solution needed for each part with answers thanks ☺

Answer 1

Knight plc
Statement of profit and loss statement
for the year ended 30 Sept 2014
Particulars	Notes	Amount
Revenue from operation		$       2,640.00
Total		$       2,640.00
Purchases		$       1,400.00
Change in inventory	6	$           64.00
Deprication		$         208.00
Administartion cost		$         360.00
Others Expenses	7	$         551.00
Total		$       2,583.00
Profit before tax		$           57.00
Income tax expense		$          (20.00)
Profit after tax		$           37.00

Knight plc
Statement of financial statement
for the year ended 30 Sept 2014
Particulars	Notes	Amount
Assets
Non current Assets
a) Fixed Assets
Tangible assets	1	$                     632.00
Intangible assets	2	$                      64.00
Current Assets
a) Inventory		$                     260.00
b) Trade Recievables		$                     400.00
Total		$                  1,356.00
Equity and Liabilties
a) Share Capital	3	$                     850.00
b) Reserve and surplus	4	$                     104.00
Deferred Tax liabilty		$                      12.00
Non current liabilties
Non current Borrowing
a) Long term borrowing	5	$                     100.00
Current liabilties
a) Short term borrowing		$                      86.00
b) Trade Payable		$                     164.00
c) Application money refundable		$                      20.00
d) Provision for tax		$                      20.00
Total		$                  1,356.00

Notes to accounts:

Notes to account
Note-1 Tangible assets
Machinery	$         800.00
Accumulated deprication	$        (368.00)
	$         432.00
Fixtures	$         400.00
Accumulated deprication	$        (200.00)
	$         200.00
Total	$         632.00
Note-2 Intangible assets
Patents	$           64.00
Total	$           64.00
Note- 3 Share Capital
Issued capital
25p Oridnary Share	$         800.00
Issued during the year	$           50.00
Total	$         850.00
Note-4 Reserve and surplus
Opening retained earning	$           77.00
Dividend	$          (20.00)
Profit for the year	$           37.00
Cloing retained earning	$           94.00
Share above par value	$           10.00
Total	$         104.00
Note -5 Long term borrowing
Mortage debenture 6%	$         100.00
Total	$         100.00
Note: 6-Change in inventory
Opening	$         324.00
Closing	$         260.00
Change	$           64.00
Note: 7-Other expenses
Rent,rates and insurance at factory	$         248.00
Director remuneration	$         180.00
Debenture interest	$             3.00
Advertising	$         120.00
Total	$         551.00

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