In: Accounting
H Plc acquired 80 % of the ordinary shares , 25% of the preference shares of S plc when the retained profits S Plc were Sh.10,000.In addition , H Plc owns 30% of the loan stock of S Plc. The following are their draft profit and loss accounts of the year to 31st December Yr 5.
H Plc | S Plc | |
Sh. | Sh. | |
Turnover | 962,212 | 227,383 |
Cost Of Sales | -621,679 | -169,463 |
GROSS PROFIT | 340,533 | 57,920 |
Distribution Costs | -21,460 | -2,460 |
Administration Costs | -46,293 | -13,940 |
272,780 | 41,520 | |
Investment Income | 16,900 | 2,400 |
Interest On Loan Stock | 0 | -4,000 |
289,680 | 39,920 | |
Taxation | -121,340 | -13,920 |
168,340 | 26,000 | |
EOI | 21,500 | 6,000 |
189,840 | 32,000 | |
Dividend | -40,000 | -10,000 |
Retained Profit for the year | 149,840 | 22,000 |
Retained b/f | 30,000 | 12,000 |
179,840 | 34,000 | |
The following information is relevant:
a)Turnover of of H included Sh.100,129 of goods sold to S
b) The Stock of S includes an unrealized profit of Sh.3,400
c)The Dividends of S are Sh.6,000 ordinary and Sh.4,000 preference
d) The investment income of H included Sh.4,800 of S ordinary dividend, Sh.1,000 of S preference dividend and Sh.1,200 of S loan stock interest.
Required:
Provide Consolidated Income Statement .Show the necesary workings
H Plc |
S Plc |
Total (H Plc + S Plc) |
Adjustment remarks |
Adjustment Amount |
Consolidated |
|
Sh. |
Sh. |
Sh. |
Sh. |
Sh. |
||
Turnover |
962,212 |
227,383 |
1,189,595 |
Inter Sales |
-100129 |
1,089,466 |
Cost Of Sales |
-621,679 |
-169,463 |
-791,142 |
-791,142 |
||
Unrealized profit add back |
-3400 |
-3400 |
||||
GROSS PROFIT |
340,533 |
57,920 |
398,453 |
- |
294,924 |
|
Distribution Costs |
-21,460 |
-2,460 |
-23,920 |
- |
-23,920 |
|
Administration Costs |
-46,293 |
-13,940 |
-60,233 |
- |
-60,233 |
|
272,780 |
41,520 |
314,300 |
- |
210,771 |
||
Investment Income |
16,900 |
2,400 |
19,300 |
Reduce inter Investment income from S Plc |
-7,000 |
12,300 |
Interest On Loan Stock |
0 |
-4,000 |
-4,000 |
Interest On Loan Stock to H Plc |
1200 |
-2,800 |
289,680 |
39,920 |
329,600 |
-5,800 |
220,271 |
||
Taxation |
-121,340 |
-13,920 |
-135,260 |
-135,260 |
||
168,340 |
26,000 |
194,340 |
85,011 |
|||
EOI |
21,500 |
6,000 |
27,500 |
27,500 |
||
189,840 |
32,000 |
221,840 |
112,511 |
|||
Dividend |
-40,000 |
-10,000 |
-50,000 |
Reduce expense for inter dividends paid |
5,800 |
-44,200 |
Retained Profit for the year |
149,840 |
22,000 |
171,840 |
68,311 |