Leaving Cert Accounting Published Accounts: Danner plc has an authorised sha

Question

Danner plc has an authorised share capital of €690,000 divided into 700,000 ordinary shares at €1 each and 200,000 4% preference shares at €1 each. The following trial balance was extracted from its books at 31/12/2013:

Buildings at cost ...............................  €750,000
Buildings - Accumulated Depreciation on 01/01/2013 ..............  €81,000
Vehicles at cost ..................................  €240,000
Vehicles - Accumulated Depreciation on 01/01/2013 ..............  €25,000
Quoted Investments at cost (directors' value €60,000) .........  €120,000
Stock on Hand ......................................  €19,000
Debtors and Credits ...............................  €195,000
Patent on 01/01/2013 ............................  €20,000
Administrative expenses .........................  €38,500
Distribution costs ................................  €3,000
Sales income ......................................  €1,770,500
Rental income .....................................  €1,200
Profit on sale of land ...........................  €20,000
Dividends paid ....................................  €22,000
VAT ................................................  €1,000
5% Debentures 2018/2019 ........................  €55,000
Profit & Loss account at 01/01/2013 ...........  €1,500
Investment Income received - quoted ...........  €2,000

The following information is relevant:

(i) Stock on 31/12/2013 is €90,000.

(ii) During the year, land adjacent to the company’s premises, which had cost €10,000 was sold for €130,000. The value of the company’s remaining land is €690,000. The company intends to incorporate this value in this year’s accounts.

(iii) Included in administrative expenses is the cost of €3,000 for patent royalties.

(iv) Depreciation on buildings and vehicles are to be calculated; buildings are to be depreciated at 2% per annum straight line, while vehicles are to be depreciated at 25% per annum.

(v) The undersigned director acknowledges that vehicles due to age are now of no resale value. The amortisation is to be included in costs of sales.

Required:

(a) Prepare the Published Profit & Loss account for the year 31/12/2013, in accordance with the Companies Acts and appropriate accounting standards, showing the following notes:
1. Accounting policies
2. Tangible fixed assets

(b) (i) State three items of information that must be included in a Directors’ Report.

(ii) Explain the term ‘Exceptional Item’ and use an example to support your answer.

Description	Amount (€)
Turnover	1,770,000
Cost of Sales	(1,004,500)
Gross Profit	765,500
Distribution Costs	(3,000)
Administrative Expenses	(311,750)
Other Operating Income	12,000
Operating Profit	462,750
Interest Payable	(2,100)
Profit on Ordinary Activities Before Taxation	460,650
Taxation	(99,750)
Profit After Tax	360,900
Dividends Paid	(22,000)
Profit Brought Forward at 01/01/2013	1,500
Profit Carried Forward at 31/12/2013	340,400

Description	Amount (€)
Buildings	750,000
Less: Accumulated Depreciation	(81,000)
Net Book Value of Buildings	669,000
Vehicles	240,000
Less: Accumulated Depreciation	(25,000)
Net Book Value of Vehicles	215,000

Danner plc has an authorised share capital of €690,000 divided into 700,000 ordinary shares at €1 each and 200,000 4% preference shares at €1 each - Leaving Cert Accounting - Question 3 - 2014

Worked Solution & Example Answer:Danner plc has an authorised share capital of €690,000 divided into 700,000 ordinary shares at €1 each and 200,000 4% preference shares at €1 each - Leaving Cert Accounting - Question 3 - 2014

Prepare the Published Profit & Loss account for the year 31/12/2013

Published Profit & Loss Account of Danner plc for the year ended 31/12/2013

1. Accounting policies

2. Tangible fixed assets

3. State three items of information that must be included in a Directors’ Report.

4. Explain the term ‘Exceptional Item’ and use an example to support your answer.

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