In: Accounting
Emerald Ltd, a manufacturing company, commenced operations on 1 July 2016 by issuing 350 000 $5.00 shares, payable in full on application on a first-come, first-served basis. By 31 July 2016 the shares were fully subscribed and duly allotted. There were share issue costs of $10 000. No additional shares were issued during the year ending 30 June 2017.
For the year ending 30 June 2018, the company recorded the following aggregate transactions:
$ |
|
Sales |
5 120 000 |
Interest income |
34 000 |
Sundry income |
25 000 |
Cost of Sales |
2 465 000 |
Employee benefit expenses |
856 000 |
Depreciation expense |
244 000 |
Amortisation - franchise |
25 000 |
Rental expense |
120 000 |
Advertising expense |
147 000 |
Insurance expense |
48 000 |
Freight out expense |
110 000 |
Doubtful debts expense |
16 000 |
Interest expense |
36 000 |
Borrowing Costs |
9 000 |
Other expenses |
8 000 |
Income tax expense |
320 000 |
The following additional information was noted during the preparation of financial statements for the year ended 30 June 2018:
75 000 fully paid ordinary shares have been issued on 1 October 2017 at the price of $4.00.
$135 000 dividends (31.76 cents per share) were declared and paid during the 2018 financial year. A final dividend for 2018 of $51 850 was proposed but not recognised in the financial statements.
There was a gain of $20 000 from the cash flow hedge arrangement during the 2018 financial year. Any gain or loss associated with the cash flow hedge is directly recognised in equity. There was no previously recognised cash flow hedge reserve before the 2018 financial year.
$25 000 of bank loans is repayable within 1 year.
$90 000 of other loans is repayable within 1 year.
The employee benefits of $32 000 are expected to be settled wholly within 12 months.
Emerald Ltd measures inventory at the lower of cost and net realizable value and property, plant and equipment using a cost model.
The summarised balances are provided below:
Year-end balances, 30 June 2018 |
$ |
Cash on hand |
960 000 |
Cash on deposit, at call |
82 000 |
Accounts Receivables |
665 000 |
Allowance for doubtful debts/ Impairments |
24 000 |
Other debtors |
27 000 |
Finished goods inventories, 30 June 2018 |
600 000 |
Work in Progress inventories 30 June 2018 |
105 000 |
Land |
94 000 |
Buildings |
230 000 |
Accumulated depreciation – buildings |
60 000 |
Plant and equipment |
1 385 000 |
Accumulated depreciation – plant and equipment |
330 000 |
Franchises |
140 000 |
Accumulated amortisation of franchise |
50 000 |
Goodwill |
620 000 |
Bank loans |
92 000 |
Other loans |
440 000 |
Accounts payable |
696 000 |
Provision for employee benefits |
116 000 |
Income tax payable |
35 000 |
Deferred tax liability |
140 000 |
Retained earnings, 30 June 2017 |
225 000 |
Dividends paid |
135 000 |
Cash flow hedge reserve (equity) |
20 000 |
Prepare a statement of profit or loss and comprehensive income for Emerald Ltd in accordance with the requirements of AASB 101. Emerald Ltd uses the single statement format for the statement of comprehensive income and classifies expenses by function within the statement;
STATEMENT OF PROFIT AND LOSS |
||
Particulars |
Amount |
|
Revenue from Operations |
5120000 |
|
Other Income |
59000 |
|
Total Income |
5179000 |
|
EXPENSES |
||
a) Cost of Sales |
2465000 |
2465000 |
b) Purchases of Stock in Trade |
||
c) Changes in Inventories |
||
d) Employee Benefit Expense |
856000 |
856000 |
e) Finance Costs |
36000 |
|
9000 |
45000 |
|
f) Depreciation and Amortisation Expense |
244000 |
|
25000 |
269000 |
|
g) Other Expenses |
||
Rental |
120000 |
|
Insurance |
48000 |
|
Advertising |
147000 |
|
Freight Out |
110000 |
|
Other Expense |
8000 |
|
Doubtful Debts Expense |
16000 |
449000 |
Provisions for |
||
Employee Benefits |
116000 |
|
Doubtful Debts Expense |
24000 |
274000 |
TOTAL EXPENSES |
1893000 |
|
PROFIT BEFORE TAX |
572000 |
|
Tax Expense |
320000 |
|
PROFIT AFTER TAX |
252000 |
|
Dividend |
135000 |
|
RETAINED EARNINGS |
117000 |
STATEMENT OF OTHER COMPREHENSIVE INCOME |
|
GAIN FROM CASH FLOW HEDGE |
20000 |
INCOME FROM OTHER COMPREHENSIVE INCOME |
20000 |