FA – May 2022 – L1 – SB – Q1b – Financial Statements Preparation

Prepare the statement of profit or loss and financial position for Wazobia PLC using the provided trial balance and adjustments.

Question

The following trial balance has been extracted from the books of Wazobia PLC as at December 31, 2020:

Description	Dr (₦’000)	Cr (₦’000)
Accruals		4,002
Administrative expenses	65,990
24% bank loan repayable 2023		50,000
Cash at bank	4,207
Distribution costs	84,235
Interest	6,000
Inventories at January 1, 2020	73,735
Property, plant and equipment (PPE) at cost	603,950
Accumulated depreciation on PPE		238,932
Purchases	279,168
Retained earnings		207,410
Revenue		531,611
Share capital		100,000
Share premium		46,875
Trade payables		23,253
Trade receivables	84,798
Total	1,202,083	1,202,083

Additional information:
(i) The share capital of the company consists of ordinary shares with a nominal value of ₦1 each.
(ii) The revenue figure in the trial balance includes sales of ₦29,502,000 made on credit on January 1, 2021.
(iii) The inventories at the close of business on December 31, 2020, cost ₦78,815,000. Included in the figure were inventories that cost ₦4,500,000 but could only be sold for ₦1,688,000.
(iv) Electricity bills of ₦1,472,000 relating to December 2020 were not included in the trial balance as the invoice was received after the year-end.
(v) Interest on the bank loan for the last six months of the year was not included in the trial balance.
(vi) The company income tax charge for the year was calculated as ₦12,702,000.

Required:
(i) Prepare the statement of profit or loss and other comprehensive income of Wazobia PLC for the year ended December 31, 2020. (6 Marks)
(ii) Prepare the statement of financial position at December 31, 2020. (8 Marks)

Answer

(b)

Statement of Profit or Loss and Other Comprehensive Income for the Year Ended December 31, 2020