The trial balance of Harmonica Ltd at 31 December 20X1

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The trial balance of Harmonica Ltd at 31 December 20X1 is given below.Additional
information1. Closing inventory amounted to £5m.2. A review of the trade receivables total of
£6.9m showed that it was necessary to write off debts totalling £0.4m, and that the provision for
doubtful debts should be adjusted to 2 per cent of the remaining trade receivables.3. Two
transactions have been entered in the company's cash record and transferred to the suspense
account shown in the trial balance. They are:a. The receipt of £1.5m from the issue of 500,000
£1 equity shares at a premium of £2 per share.b. The sale of some surplus plant. The plant had
cost £1m and had a written down value of £100,000. The sale proceeds of £150,000 have been
credited to the suspense account but no other entries have been made.4. Depreciation should
be charged at 10 per cent per annum on cost at the end of the year and allocated 70 per cent to
distribution costs and 30 per cent to administration.5. The directors propose a final dividend of 4
pence per share on the shares in issue at the end of the year.6. Accruals and prepayments still
to be accounted for are:___________________________Prepayments AccrualsGeneral
administrative expense..........70.........................140General distribution
expenses............40...........................90..............................................110.........................2307.
Directors' remuneration is to be analysed between distribution costs and administrative
expenses as follows:Distribution...............300Administration............570..............................8708.
Ignore taxation.RequiredPrepare the company's statement of comprehensive income and
statement of changes in equity for the year ended 31 December 20X1, and statement of
financial position as at 31 December 20X1 in a form suitable for publication. Notes to the
financial statements are not required.View Solution:
The trial balance of Harmonica Ltd at 31 December 20X1

ANSWER
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