In: Accounting
Question 2
Table Plc is currently preparing financial statements for the year ended 31 March 2019.
The accounting team discover that the sales figure for 31 March 2018 was understated by £200,000. The Trade Receivables at 31 March 2018 was also understated by the same amount.
This error is regarded as material.
Table Plc’s draft Profit or Loss Comprehensive Income Statement for the year to 31 March 2019, before correction of the error, is as follows:
2018 2019
£000 £000
Revenue 1,660 1,740
Cost of Sales (670) (730)
Gross Profit 990 1,010
Expenses (590) (560)
Profit before taxation 400 450
Income tax expense (80) (90)
Profit for the year 320 360
Retained earnings at 1 April 2017 were £950,000. No dividends were paid during the two years to 31 March 2019. It should be assumed that Table Plc’s tax liability is always 20% of its profit before tax.
Requirement:
Table Plc | ||
Statement of Comprehensive Income | ||
For the year ended March 31, 2019 | ||
2019 | 2018 | |
£ 000 | £ 000 | |
Revenue | 1,940 | 1,660 |
Cost of Goods Sold | (730) | (670) |
Gross Profit | 1,210 | 990 |
Expenses | (560) | (590) |
Profit before Taxation | 650 | 400 |
Income Tax Expenses | (130) | (80) |
Profit for the Year | 520 | 320 |
Table Plc | ||
Statement of Changes in return earnings | ||
For the year ended March 31, 2019 | ||
2019 | 2018 | |
£ 000 | £ 000 | |
Opening Retained Earnings | 1,270 | 950 |
Add: Net Income | 520 | 320 |
1,790 | 1,270 | |
Less: Dividends | - | - |
Closing Retained Earnings | 1,790 | 1,270 |