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Question 2 [15 marks] Preparation of a statement of financial position and statement of profit or loss and other comprehensive income The summarised trial balance of Smarties Ltd, a snack food manufacturing company, includes the following accounts at 30 June 2015: DR ($000) CR ($000) Sales revenue 1,106 Interest income 8 Gain on sale of office equipment 10 Cost of goods sold 524 Administration expenses 143 Administrative salaries 30 Advertising expense 22 Annual leave 8 Depreciation - administration office equipment 28 Depreciation - sales equipment 40 Distribution costs 70 Doubtful debts 6 Goodwill impairment loss 5 Interest expense 27 Long service leave 3 Rent - administration office 7 Rent - sales showroom 8 Sales staff salaries 95 Shipping supplies 10 Sundry expenses 17 Proceeds from insurance claim 20 Income tax expense 39 Cash on hand 12 Accounts receivable 118 Allowance for doubtful debts 11 Inventories 92 Investment property 130 Deferred tax assets 18 Patent (at cost) 200 Goodwill 100 Accumulated impairment losses - goodwill 25 Administration office equipment 172 Accumulated depreciation - office equipment 83 Sales equipment 300 Accumulated depreciation - sales equipment 120 Accounts payable 114 Bank overdraft 13 Current tax liability 37 Bank loan 175 Provision for annual leave 12 Provision for long service leave 7 Deferred tax liabilities 22 Share capital (ordinary fully paid) 400 Retained earnings at 1 July 2014 36 General reserve 25 2,224 2,224 Additional information: • All assets other than accounts receivable, cash on hand and inventories are non-current. All liabilities other than accounts payable, bank overdraft, provisions listed below and current tax liability are non-current. • There was no movement in the general reserve during the year. • Provision for annual leave includes $7,000 payable within 1 year. Of the $8,000 annual leave expense recognised, $6,000 relates to the sales staff, and $2,000 relates to the administrative staff. • Provision for long service leave includes $2,000 payable within 1 year. Of the $3,000 long service leave expense recognised, $2,000 relates to the sales staff, and $1,000 relates to the administrative staff. • Smarties Ltd uses the single statement format for the statement of profit or loss and other comprehensive income and presents an analysis of expenses by function on the statement. Required: Prepare the statement of financial position and statement of profit or loss and other comprehensive income of Smarties Ltd for the year ended 30 June 2015 in accordance with AASB 101, using the line items that a listed company is likely to use. When preparing the statement of financial position, use the minimum line items specified in AASB 101 when reporting the assets and liabilities. Sub-classifications of these minimum line items should not be shown on the face of the statement. Show all workings. Notes and comparative figures are not required. Question 2 Allocated marks Minimum line items provided appropriately 10 Explanations / workings provided appropriately 2 Presentation 3 QUESTION 2: Preparation of Financial Statements Criteria HD D CR PS Question 2: Prepare financial statements in accordance with the accounting standards. financial statements are prepared without flaw. Explanations shown are exemplary and clear. Appropriate workings are shown and accurate. Work shown is logical and well presented. Financial statements are prepared with minor flaws. Explanations shown are clear and succinct. Appropriate workings are shown and accurate. Work shown is logical and well presented. financial statements are prepared with some errors. Explanations shown are adequate. Appropriate workings are shown. Work shown is logical and well presented. Financial statements are prepared with some errors. Explanations shown are basic. Some workings are shown. Work shown is presented fairly.

Question Set #373

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