Question

Question One:

The following data extracted from the trial balance of ABC Company on Dec 31^st 2020:

Financial Statement item	Amount	Financial Statement Item	Amount
Buildings	1,200,000	Motor vehicles – Accumulated depreciations	180,000
Cash	320,000	Depreciation expenses	630,000
Sales revenues	16,000,000	Purchases returns and allowance	96,000
Sales commission	120,000	Interest expenses	1,150,000
Travel expense - sale	75,000	Gains on sale of lands	455,000
Equipment	840,000	Notes payable	2,890,000
Account payable	420,000	Equipment – accumulated depreciation	440,000
Goodwill	3,000,000	Impairment loss – equipment	260,000
Purchases	6,400,000	Accumulated unrealized gains of non-trading securities	265,000
Trading securities	1,460,000	Sales returns and allowance	215,000
Account receivables	810,000	Customs and taxes – purchases	1,045,000
License	475,000	Utilities expenses	167,500
Audit fees	90,000	Customer list	300,000
Freight –in	85,000	Loss due to an earthquake damage	618,000
Repair expenses	76,000	Interest revenues	148,000
Purchases discount	128,000	loss on operation of the disposed division	195,000
Beginning inventory	1,487,500	Legal and accounting expenses	47,000
Share capital – ordinary	4,250,000	Buildings – Accumulated depreciation	280,000
Advertising expenses	630,000	Unearned revenues	215,000
Supplies	112,000	Furniture and computers	350,000
Prepaid insurance	120,000	Leasing liabilities	3,400,000
Notes receivables	1,650,000	Share premium – preference	675,000
Bonds payables	5,000,000	Share premium – treasury	180,000
Wages payable	62,000	Retained earnings	??
Dividends revenues	243,000	Accumulated revaluation surplus	220,000
Sales discount	145,000	Non-trading securities	5,575,000
Trade payables	88,000	Gains on currency exchange	140,000
Lands	3,050,000	Legal reserve	312,500
Delivery expenses	313,000	Share premium – ordinary	2,000,000
Rent expenses	94,000	Patent	960,000
Insurance expense	40,000	Treasury shares (400,000 * 3)	1,200,000
Motor vehicles	1,550,000	Held to maturity investment	3,417,000
Revaluation surplus	150,000	Salaries and wages expenses	1,180,000
Share capital – preference	2,000,000	Investment in preference shares	2,100,000
Franchise	1,450,000	Allowance for doubtful accounts	60,000
Mortgage payable	900,000	Loss on disposal of Salmya Branch’ assets	324,000
Dividends declared	700,000	Loss on sales of trading securities	81,500
Land for speculations	650,000	Buildings to lease out	1,850,000

Additional Information that was not included in the trial balance:

• The number of ordinary shares is 10,000,000 shares authorized, 4,250,000 issued and 3,850,000 outstanding.
• There are 10 KD par, (10%), 200,000 authorized, issued and outstanding preference shares.
• 10% of the account receivables will be collected in 2022.
• The insurance policy was purchased on Jan 1^st 2020 for 160,000 KD and covers 4 years. One fourth of the amount was expensed as insurance expense during 2020 and the rest 120,000 will be expensed over the coming three years.
• 50,000 KD of the mortgage payable due during next year.
• 200,000 KD of the dividends declared foe preference shares
• 150,000 KD of the notes receivables due next year
• Salaries and wages expenses are 60% sales and 40% offices
• Depreciation expenses are 20% sales and 80% offices.
• Ending inventories was evaluated at 1,225,000 KD on Dec 31^st 2020
• 400,000 KD of the leasing liabilities due next year.
• Utilities expenses are 30% sales and 70% offices.
• 490,000 KD of the notes payable due next year.
• Fair value of trading securities on Dec 31^st 2020 is 1,615,000 KD
• Fair value of non-trading securities on Dec 31^st 2020 is 6,450,000 KD
• Goodwill was revalued during the period at 4,000,000 KD.
• Patent was impaired by 260,000 but it has not been recognized.
• The company is subject to 30% income tax on all items.

Required:

1. Prepare trial balance for ABC Company on Dec 31^st 2020 and calculate retained earnings beginning balance?
2. Prepare statement of comprehensive income, retained earnings statement and statement of financial position for ABC Company in good format and according to the requirements of IAS 1?

Answer 1