DescriptionThe following trial balance has been extracted from the books of Middle East Drone Company Ltd. on 31
December 2022
Debit
Credit
Administration expenses
$ 625,000
$
Distribution expenses
737,500
Share Capital
675,000
Share premium
200,000
Revaluation surplus
50,000
Dividend paid
67,500
Cash in hand
1,250
Cash at bank
6,250
Receivables
582,500
Interest paid
62,500
Dividends received
37,500
Interest received
2,500
Land and buildings at cost (land $760,000, buildings $200,00)
1,200,000
Land and buildings: accumulated depreciation
75,000
Plant and machinery
1,000,000
Plant and machinery: accumulated depreciation
425,000
Retained earnings (as on 1 January 2022)
587,500
Purchases
3,150,000
Sales
5,412,500
Inventory as on 1 January 2022
350,000
Trade payables
67,500
Bank loan
250,000
$ 7,782,500
$ 7,782,500
Additional information:
1). Inventory on 31 December 2022 was valued at cost of $237,500. Included in this balance were
goods that cost $37,500. These goods had become damaged during the year, and it is considered
that the goods could be sold for $12,500 after paying commission of $1,250.
2). Depreciation for the year to 31 December 2022 is to be charged against cost of sales as follows.
Buildings
5% on cost (straight line).
Plant and machinery
30% on carrying amount (reducing balance)
3), Land is to be revalued upwards by $200,000
4), Income tax of $330,000 is to be provided for the year to 31 December 2022.
5.The bank loan is repayable in 6 years’ time.
6.The directors declared a final dividend of $337.500.
Required:
Prepare the statement of profit or loss and other comprehensive income, statement of changes in
equity and statement of financial position for the year ended 31 December 2022.
Note: Show all workings.
pg. 1
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