Question

NewSpace Ltd, a retail company for books and toys, commenced operations on 1 July, 2016 by issuing 70 000 $2.00 shares (totalling $140 000), payable in full on application. By 31 July, 2016 the shares were fully subscribed and duly allotted. There were no share issue costs. No additional shares were issued during the financial year ending 30 June 2017.

For the year ending 30 June 2018, the company recorded the following aggregate transactions:

Accounts	$’000
Interest income	5
Sales and distribution expenses	660
Administration charges	100
Interest expense	30
Income tax expense	130
Cash on hand	5
Cash on deposit, at call	10
Trade debtors	150
Allowance for doubtful debts	14
Other debtors	50
Inventory	401
Financial assets held for trading	101

Land and buildings	135
Accumulated depreciation – buildings	22
Plant and equipment	210
Accumulated depreciation – plant and equipment	45
Patents	15
Amortisation of patents	2
Bank loans	32
Other loans	231
Trade creditors	132
Provision for employee benefits	54
Warranty provision	31
Current tax payable	12
Land revaluation surplus, net of tax	33
Share Capital, 30 June 2017	140
Retained earnings, 30 June 2017	25

After receiving the preliminary figures for the year, the directors of NewSpace Ltd convened a board meeting on 30 June 2018 and noted the following:

Sales on credit of $1 000 000 and for cash of $1 444 000 were made during the 2018 financial year. Cost of sales was $1 212 000.

An additional 23 000 $2.00 shares have been issued and fully paid on 1 July 2017 during the 2018 financial year.

Sales and distribution expenses include sales and marketing expenses of $610 000 and distribution expenses of $50 000.

$59 000 dividends (63.44 cents per share) were declared and paid during the 2018 financial year.

Plant and equipment were measured at cost.

Land and buildings were measured at fair value. The following revaluation

was recognised during the year ended 30 June 2018: land revalued upward by $30 000 (related income tax $7 000, valuation by the registered valuer, The Incredibles).

Financial assets held for trading are equity investments are that held for the purpose of selling and short-term profit taking.

$20 000 of bank loans is repayable within 1 year.

$120 000 of other loans is repayable within 1 year.

The provision for employee benefits includes $22 000 payable within 1 year.

The warranty provision is in respect of a 12-month warranty given on certain

goods sold.

Required:

For the year ending 30 June, 2018 (NOTE: comparative financial statements are not required),

Prepare a preliminary trial balance

Answer 1

Prilimanry trail balance for year ending 30th June 2018 which has numbers as per given data and can be matched once have complete information

Debit	Amount (000)	Credit	Amount (000)
Administration charges	100	Interest income	5
Interest expense	30	Allowance for doubtful debts	14
Income tax expense	130	Accumulated depreciation – buildings	22
Cash on hand	5	Accumulated depreciation – plant and equipment	45
Cash on deposit, at call	10	Bank loans	32
Trade debtors	150	Other loans	231
Other debtors	50	Trade creditors	132
Inventory	401	Provision for employee benefits	54
Financial assets held for trading	101	Warranty provision	31
Land and buildings	135	Current tax payable	12
Plant and equipment	210	Share Capital, 30 June 2017	186
Patents	15	Retained earnings, 30 June 2017	25
Amortisation of patents	2	Sales	2444
Land revaluation surplus, net of tax	33
Cost Of Sales	1212
Dividend Paid	59