Leaving Cert Accounting Published Accounts: Finan plc has an authorised shar

Question

Finan plc has an authorised share capital of €750,000 divided into 500,000 ordinary shares at €1 each and 250,000 5% preference shares at €1 each. The following trial balance was extracted from its books on 31/12/2019:

Buildings at cost €800,000
Buildings - accumulated depreciation on 01/01/2019 €74,000
Vehicles at cost €420,000
Vehicles - accumulated depreciation on 01/01/2019 €134,000
Quoted investments at cost (market value €290,000) €250,000
Unquoted investments at cost (directors' value €98,000) €85,000
Debtors and creditors €302,000 €308,000
Stock 01/01/2019 €85,000
Patent 01/01/2019 €91,000
Distribution costs €378,000
Administrative expenses €92,000
Purchases and sales €1,450,000 €2,380,000
Rental income €60,000
Profit on sale of land €65,000
Dividends paid €38,000
Bank €79,000
6% Debentures 2024/2025 €300,000
Provision for bad debts €15,000
Profit and loss account at 01/01/2019 €81,000
Investment income received €10,500
Income received – unquoted €5,500
Issued capital
Ordinary shares €350,000
5% preference shares €200,000

The following information and instructions are to be taken into account:

(i) Stock on 31/12/2019 was €11,000.
(ii) During the year, land adjacent to the company’s premises, which had cost €140,000 was sold for €205,000. At the end of the year the company revalued its buildings at €1,000,000. The company wishes to incorporate this value in this year’s accounts.
(iii) Provide for debenture interest due, auditor’s fees €14,000, director’s fees €50,000 and corporation tax €120,000.
(iv) Included in administrative expenses is the receipt of €12,000 for patent royalties.
(v) Depreciation is to be provided for on buildings at a rate of 2% straight line and is to be allocated 20% to distribution costs and 80% to administrative expenses. There was no purchase or sale of buildings during the year. Vehicles are to be depreciated at a rate of 20% of cost.

(vi) The patent was acquired on 01/01/2017 for €117,000. It is being amortised over 9 years in equal instalments. The amortisation is to be included in cost of sales.

Required:

(a) Prepare the published profit and loss account of Finan plc for the year ended 31/12/2019, in accordance with the Companies Acts and appropriate accounting standards, showing the following notes:
1. Accounting policy note for tangible fixed assets and stock
2. Operating profit
3. Financial fixed assets
4. Tangible fixed assets

(b) Explain three reasons why a public limited company publishes its annual report and accounts.

Finan plc has an authorised share capital of €750,000 divided into 500,000 ordinary shares at €1 each and 250,000 5% preference shares at €1 each - Leaving Cert Accounting - Question 2 - 2020

Worked Solution & Example Answer:Finan plc has an authorised share capital of €750,000 divided into 500,000 ordinary shares at €1 each and 250,000 5% preference shares at €1 each - Leaving Cert Accounting - Question 2 - 2020

Prepare the published profit and loss account of Finan plc for the year ended 31/12/2019

Profit and Loss Account for Finan plc for the year ended 31/12/2019

Notes to Accounts

Explain three reasons why a public limited company publishes its annual report and accounts

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