Extracted text: 1 Darth plc generated the following trial balance on 31 March 2016: Leasehold land & buildings at cost at 1 April 2015 Fixtures & fittings at cost at 1 April 2015 Vehicles at cost Accumulated amortisation at 1 April 2015: - Leasehold land & buildings Accumulated depreciation at 1 April 2015: - Fixtures & fittings - Vehicles Bank loan Bank loan interest Distribution and selling costs Salaries & wages Inventory at 1 April 2015 Purchases Trade receivables Trade payables Provision for doubtful debts 1,500,000 159,000 85,000 450,000 81,090 34,000 50,000 2,750 313,600 350,000 119,500 5,684,575 485,785 296,830 1,500 251,800 Bank account Sales Legal fees Bad debts Administration costs Ordinary share capital at 1 April 2015 Retained profit reserve at 1 April 2015 General reserve at 1 April 2015 Suspense account 7,285,985 32,500 12,500 225,295 750,000 285,400 100,000 2010 heve 112,500 9,334,805 9,334,805 The following information is also available: • The nominal value of each ordinary share is 50p. All the allotted share capital has been issued and fully paid up. Darth plc charges amortisation // depreciation as follows: Amortisation of leases over the lease period of 100 years on a straight line basis, Depreciation of fixtures & fittings on a reducing balance basis at the rate of 30% Depreciation of vehicles on a straight line basis over 5 years. The fleet of vehicles is only used by the sales team. The leasehold land and buildings relate to both office buildings and warehouses in a ratio of 2:1, respectively. 90% of the fixtures and fittings relate to the office buildings, and 10% to the warehouses. The company initially valued its inventories held on 31 March 2016 at a historic cost of £180,000 but it was noted that, included within these inventories, was damaged stock acquired for £10,000 and only expected to sell for £7,000. per annum, Question 1 Continued on Page 2... 1
Extracted text: Continuation of Question 1: A quarter of the salaries and wages is paid to the sales team and warehouse staff. It has been decided to increase the provision for doubtful debts by 20%. Included within distribution and selling costs is a figure of £3,000 which relates to vehicle insurances for April and May 2016 of £3,000. Bad debts and changes to the provision for doubtful debts are treated as selling and distribution expenses. The electricity use of the offices, included within Administrative expenses, for the last month has not yet been accounted for, but it is estimated that the bill for March 2016 will be approximately £2,000. Based on the current year's results, corporation tax is estimated at £122,500 and is to be provided for. The bank loan was taken out in 2013 and has an annual interest rate of 6%. The loan is repayable in its entirety in December 2018. The company paid interim dividends of 7½ pence per share on 1 November 2015. The auditors discovered that the dividend payment was correctly recorded in the cash book, but had not been posted to the dividends payment account. A final dividend of 15 pence per share is proposed. Due to the increasing price of Darth plc shares currently being traded, the company decided to make a bonus issue of 2:5 shares out of general reserve and then retained profit. This took place on 29 March 2016 and has not yet been recorded in the accounts. Audit fees of £75,000, due at 31 March 2016, have not been recorded. REQUIRED: (a) Construct a table showing the total of each individual non-trading expense and the division of these expenses between the three headings of administrative costs, selling & distribution expenses and finance costs. Assume that all expenses are administrative costs unless clearly either selling & distribution expenses or finance costs, or stated as such.