RECENT ASSIGNMENT

Question 2 [15 marks]

Preparation of a statement of financial position and statement of profit or loss and other comprehensive income
The summarised trial balance of Smarties Ltd, a snack food manufacturing company, includes the following accounts at 30 June 2015:
DR ($000) CR ($000)
Sales revenue 1,106
Interest income 8
Gain on sale of office equipment 10
Cost of goods sold 524
Administration expenses 143
Administrative salaries 30
Advertising expense 22
Annual leave 8
Depreciation - administration office equipment 28
Depreciation - sales equipment 40
Distribution costs 70
Doubtful debts 6
Goodwill impairment loss 5
Interest expense 27
Long service leave 3
Rent - administration office 7
Rent - sales showroom 8
Sales staff salaries 95
Shipping supplies 10
Sundry expenses 17
Proceeds from insurance claim 20
Income tax expense 39
Cash on hand 12
Accounts receivable 118
Allowance for doubtful debts 11
Inventories 92
Investment property 130
Deferred tax assets 18
Patent (at cost) 200
Goodwill 100
Accumulated impairment losses - goodwill 25
Administration office equipment 172
Accumulated depreciation - office equipment 83
Sales equipment 300
Accumulated depreciation - sales equipment 120
Accounts payable 114
Bank overdraft 13
Current tax liability 37
Bank loan 175
Provision for annual leave 12
Provision for long service leave 7
Deferred tax liabilities 22
Share capital (ordinary fully paid) 400
Retained earnings at 1 July 2014 36
General reserve 25
2,224 2,224
Additional information:
• All assets other than accounts receivable, cash on hand and inventories are non-current. All liabilities other than accounts payable, bank overdraft, provisions listed below and current tax liability are non-current.
• There was no movement in the general reserve during the year.
• Provision for annual leave includes $7,000 payable within 1 year. Of the $8,000 annual leave expense recognised, $6,000 relates to the sales staff, and $2,000 relates to the administrative staff.
• Provision for long service leave includes $2,000 payable within 1 year. Of the $3,000 long service leave expense recognised, $2,000 relates to the sales staff, and $1,000 relates to the administrative staff.
• Smarties Ltd uses the single statement format for the statement of profit or loss and other comprehensive income and presents an analysis of expenses by function on the statement.
Required:
Prepare the statement of financial position and statement of profit or loss and other comprehensive income of Smarties Ltd for the year ended 30 June 2015 in accordance with AASB 101, using the line items that a listed company is likely to use. When preparing the statement of financial position, use the minimum line items specified in AASB 101 when reporting the assets and liabilities. Sub-classifications of these minimum line items should not be shown on the face of the statement. Show all workings. Notes and comparative figures are not required.

Question 2 Allocated marks
Minimum line items provided appropriately 10
Explanations / workings provided appropriately 2
Presentation 3
QUESTION 2: Preparation of Financial Statements

Criteria HD D CR PS
Question 2:
Prepare financial statements in accordance with the accounting standards. financial statements are prepared without flaw.
Explanations shown are exemplary and clear.
Appropriate workings are shown and accurate.
Work shown is logical and well presented. Financial statements are prepared with minor flaws.
Explanations shown are clear and succinct.
Appropriate workings are shown and accurate.
Work shown is logical and well presented. financial statements are prepared with some errors.
Explanations shown are adequate.
Appropriate workings are shown.
Work shown is logical and well presented. Financial statements are prepared with some errors.
Explanations shown are basic.
Some workings are shown.
Work shown is presented fairly.