FA – Nov 2021 – L1 – SB – Q3 – Trial Balance

This question involves preparing financial statements based on a given trial balance and additional adjustments.

Question

The following balances remained in the books of Chukwu Limited as at December 31, 2020:

Accounts	₦’000
200,000,000 ordinary shares of N1 each	200,000
Cash at bank and in hand	500
Inventory (December 31, 2020)	61,200
Receivables	18,005
Payables	15,009
Gross profit	128,942
General reserves	25,000
Salaries and wages	28,430
Prepayments	600
Bad debts written off	500
Accrued expenses	526
Director’s account (Credit)	2,500
Interest on loan notes (half year)	600
Sundry expenses	4,100
Rates and insurance	1,520
6% loan notes	20,000
Lighting and cooling	1,310
Postage and telephones	800
Motor vehicles (Cost ₦25,000,000)	25,000
Office fittings and equipment (Cost ₦65,500,000)	42,350
Provision for depreciation – Motor vehicles	10,000
Provision for depreciation – Office fittings & equipment	23,150
Profit or loss (January 1, 2020) (Credit)	22,300
Land and buildings (Cost)	239,362

Additional Information:

Office fittings and equipment are to be depreciated at 15% on cost, and motor vehicles at 20% of cost.
Provisions are to be made for:
- Directors’ fees of N6,000,000
- Audit fees of N2,500,000
The amount for insurance includes a premium of ₦600,000 paid in September 2020 to cover fire loss for the period September 1, 2020, to August 31, 2021.
A bill for N548,000 in respect of electricity consumed up to December 31, 2020, has not been accounted for.
The directors have recommended:
- N15,000,000 be transferred to general reserves
- A 5% dividend on ordinary share capital

You are required to prepare:
a. The trial balance of Chukwu Limited at December 31, 2020. (6 Marks)
b. The statement of profit or loss for the year ended December 31, 2020. (8 Marks)
c. The statement of financial position as at December 31, 2020. (6 Marks)
Note: Ignore taxation.