Question 2 [15 marks]

Preparation of a statement of financial position

The summarised trial balance of Smithy’s Ltd, a snack food manufacturing company, includes the following accounts at 30 June 2015:

DR ($) CR ($)
Cash on hand 5,000
Cash at bank 172,000
Trade debtors 744,000
Allowance for doubtful debts 18,000
Rent receivable 28,000
Prepaid insurance 114,000
Raw materials inventory 490,000
Work in progress inventory 151,000
Finished goods inventory 180,000
Investment in listed companies (available for sale) 252,000
Land, at valuation 1,250,000
Buildings, at cost 4,030,000
Accumulated depreciation – buildings 483,000
Plant and equipment, at cost 3,275,000
Accumulated depreciation – plant and equipment 726,000
Leased assets, at cost 775,000
Accumulated depreciation – leased assets 310,000
Goodwill 1,200,000
Accumulated impairment – goodwill 170,000
Trademarks 310,000
Deferred tax asset 18,000
Trade creditors 61,000
Sundry creditors 71,000
Bank loans 2,200,000
Debentures 825,000
Other loans 75,000
Lease liabilities 350,000
Current tax payable 52,000
Deferred tax liability 120,000
Provision for annual leave 175,000
Provision for long service leave 100,000
Provision for warranty 48,000
Share capital 5,100,000
General reserve 25,000
Asset revaluation reserve 250,000
Retained earnings 1,835,000
12,994,000 12,994,000

Additional information:
? Bank loans and other loans are all repayable in 3 years time.
? $325,000 of the debentures is repayable within 1 year.
? Lease liabilities include $125,000 repayable within 1 year.
? Investments in other companies are long-term investments.
? Provision for annual leave includes $107,000 payable within 1 year.
? Provision for long service leave includes 12,000 payable within 1 year.
? Provision for warranty includes $23,000 estimated to be incurred within 1 year.