Question 3: Published Financial Statements. The trial balance at 31 December 2022 for Air plc, a manufacturing company is: Air plc Trial Balance at 31st December 2022 Ordinary shares of £1 fully paid at 1-Jan-22 Retained earnings at 1-Jan-22 Revaluation reserve at 1-Jan-22 8% debentures Land - cost at 1-Jan-22 Buildings - at revalued amount at 1-Jan-22 Buildings - accumulated depreciation at 1-Jan-22 Motor Vehicles - cost at 1-Jan-22 Motor Vehicles - accumulated depreciation at 1-Jan-22 Fixtures and equipment - cost at 1-Jan-22 Fixtures and equipment - accumulated depreciation at 1-Jan-22 Proceeds on disposal of fixtures during the year Sales Inventory at 1-Jan-22 Salaries Directors' remuneration Sales commission Rent and rates Insurance Light and heat Trade receivables Trade payables Dividend paid in year Purchases Other administration expenses Debenture interest paid in year Cash and bank balance Bank interest received Dr £'000 1,400 1,500 400 500 810 1,010 710 180 320 112 160 610 72 2,600 160 65 530 Cr £¹000 1,200 850 400 1,000 500 80 150 12 6,474 460 13 11,139 11,139 Additional information is available as follows: 1. Closing inventory on 31 December 2022 is valued at £750,000. 2. The building, which originally cost £1,200,000, was revalued some years ago and the revaluation reserve relates to this building. It was damaged on the first day of the current reporting year (1 January 2022) and the directors revised its value (impaired the asset) down to £800,000. Its remaining useful life at that time was 20 years. An adjustment is required to account for this impairment. Question 3 continued overleaf/nQuestion 3 continued 3. During the year the only transaction relating to non-current assets was the disposal of equipment which was originally bought in May 2017 at a cost of £60,000. The proceeds of £12,000 (recorded as a credit balance in the trial balance) is the only transaction so far recorded relating to this disposal. 4. The buildings, equipment and vehicles are expected to have no residual value at the end of their useful lives. Depreciation is calculated with a full charge in the year of acquisition and none in the year of disposal, according to the following bases: • Buildings: a straight line basis, based on revalued amount and remaining useful life at revaluation date • Motor Vehicles (all of which are used in distribution activities): 20% reducing balance per annum • Fixtures and equipment: 10% straight line per annum 5. Directors' remuneration is made up as follows: CEO: Production director Sales director: Finance director: £'000 220 160 150 180 710 6. In addition to the costs in the trial balance, an accrual is required for £90,000 salaries incurred in December 2022 but paid in January 2023. Salaries in the year are to be allocated as follows: Factory staff: Distribution staff: Admin staff: £'000 350 450 300 1,100 7. All other unallocated expenses, including buildings and fixtures/equipment depreciation, are to be allocated according to floor space occupied as follows: Factory: 50% / Selling and Distribution: 20% / Administration: 30% 8. A £120,000 accrual for tax payable on the profit earned in 2022 is required. Required: Prepare for publication, showing all your workings: a) A Statement of Comprehensive Income for the year ended 31 December 2022. (12 marks) (13 marks) b) A Statement of Financial Position as at 31 December 2022.

Solved: Question 3: Published Financial Statements. The trial balance at 31 De

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question 3 published financial statements the trial balance at 31 dece

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Question 3: Published Financial Statements. The trial balance at 31 December 2022 for Air plc, a manufacturing company is: Air plc Trial Balance at 31st December 2022 Ordinary shares of £1 fully paid at 1-Jan-22 Retained earnings at 1-Jan-22 Revaluation reserve at 1-Jan-22 8% debentures Land - cost at 1-Jan-22 Building