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ACCOUNTING SAMPLE PAPER 1 2015 QUESTIONS 1 Hexham Ltd The following trial balance was extracted from the nominal ledger of Hexham Ltd on 31 March...

Hi everyone! I need your help to solve this problem. Please help me to make an Income statement and statement of financial position from the file that I attached below. Before you create the financial statements, please write down the adjusting entries first. I need the answer as soon as possible. thank you very much :)

ACCOUNTING SAMPLE PAPER 1 2015 QUESTIONS 1 Hexham Ltd The following trial balance was extracted from the nominal ledger of Hexham Ltd on 31 March 20X8: £ £ Sales 1,150,000 Inventories at 1 April 20X7 75,000 Purchases 465,000 Distribution costs 220,000 Administrative expenses 340,000 Irrecoverable debts expense 36,000 Loan interest paid 8,000 Land and buildings cost 600,000 Plant and equipment cost 340,000 Land and buildings accumulated depreciation at 1 April 20X7 96,000 Plant and equipment accumulated depreciation at 1 April 20X7 63,000 Trade receivables 60,000 Allowance for receivables 5,000 Bank 24,000 Ordinary share capital (£1 shares) 400,000 Share premium 100,000 Bank loan 200,000 Retained earnings 61,000 Ordinary dividends paid 15,000 Accounts payable 54,000 Advance deposits from customers 6,000 2,159,000 2,159,000 The following adjustments have yet to be accounted for: 1 Hexham Ltd holds two lines of inventory at 31 March 20X8. Details are as follows: Item CX100 BY200 £ £ Total cost 16,200 76,000 Selling price 15,000 83,600 2 Hexham Ltd paid an annual insurance premium of £16,800 for the year 1 September 20X7 to 31 August 20X8. This payment is included in administrative expenses. 3 The company's depreciation policy is as follows: Buildings Straight-line over 50 years Plant and equipment 10% straight-line The cost of the land was £200,000, and all non-current assets are assumed to have zero residual values. There were no additions to or disposals of non-current assets during the year ended 31 March 20X8. Depreciation on buildings is charged to administrative expenses, and depreciation on plant and equipment is charged to cost of sales. © ICAEW 2014
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4 At the year end, trade receivables include a balance of £7,560 which is considered irrecoverable. The company presents irrecoverable debts as other operating expenses on the face of the statement of profit or loss. 5 The bank loan was received on 1 July 20X7 and is repayable in full in five years. Interest is charged at a fixed rate of 8% per annum. 6 Income tax for the year ended 31 March 20X8 is estimated at £10,000. 7 The bank reconciliation performed at 31 March 20X8 revealed that Hexham Ltd had accounted for a cheque for £4,500 sent to a credit supplier as £5,400. 8 Hexham Ltd declared a dividend of 5p per share on 31 March 20X8 which was due for payment in March 20X8 9 Hexham Ltd products come with a 6 month warranty. Management estimates that 5% of warranties will be invoked, at a cost of £15,000 to Hexham Ltd. Provisions are charged to other operating expenses. 10 Hexham Ltd paid rent of £25,000 on 27 March 20X8 which covers the period 1 April 20X8 to 30 June 20X8. This amount has been included in administrative expenses. Prepare the statement of profit or loss for Hexham Ltd for the year ended 31 March 20X8 and the statement of financial position at that date. Statement of profit or loss for the year ended 31 March 20X8 £ Revenue Cost of sales Gross profit Distribution costs Administrative expenses Other operating expenses Profit / (loss) from operations Finance costs Profit / (loss) before tax Income tax Profit / (loss) for year Statement of financial position at 31 March 20X8 £ Non-current assets Land and buildings Plant and equipment Current assets Inventories Trade receivables Prepayments Cash and cash equivalents Total assets Equity Equity share capital Preference share capital Share premium Retained earnings Non-current liabilities Borrowings Current liabilities Borrowings Bank overdraft Trade payables Accruals Deferred income Tax payable Total equity and liabilities © ICAEW 2014
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