Preparing Financial Statements for Orb

Adjustments for Preparing Financial Statements for Orb

1 You  have been asked to help prepare the financial statements  of Orb,a    limited liability  company, for the year ended 31December 2o2O. Orb's trial balance at 31December 2o2O is set out  below.

Orb - Trial Balance at 3a December 2020

Some further information has come to tight and you have been asked to review the trial balance in the tight of this information and to make any further adjustments necessary before preparing the financial statements.

The following additional information is provided:

1.) The cost of closing inventory was £goo.ooo at 31December zozo. However. this inventory had  been damaged by a flood in November zo2o and was sold in January 2o21 for Is    o.ooo.

2.) A survey fee of £4a,ooo  for a building bought during the year had been included in  administrative expenses. Buildings are depreciated on a straight line basis over 25 years.

3.) During the year Orb carried out investigations into future products. E62o,ooo was spent.  of which £soo.ooo qualified as development and the remainder as research. The future products had  not yet come into production by 31 December 2020.

In accordance with IAS 1 Presentation o[FinancialStatements.

(a) Prepare Orb's statement of profit or loss and other comprehensive income for the year  ending 31 December 2020

(b) Prepare Orb's statement of changes in equity for the year ending 31 December zozo.

(c) Prepare Orb's statement of financial position as at 31 December 2o2O.

(d) Prepare Mop's statement of cash flows for the year encted 31 December 2020, in accordance with IAS7 Statement of cash flows.   

(e) Explain the key cause of the fall incash held by Mop between December 2o19 and December 2020

 2 Mop Ltd is preparing its Statement of Cash Flows for the year ended 31 December 2020. On 1 July 2020 Mop repaid E10,000 of its 10% loans and replaced this with a new 8% loan. Additionally, some of the 10% loan became repayable within 12 months.  Mop sells some goods, which are faulty on the day of delivery to the customer. A provision is made each year for the future costs of rectifying these goods. A number of pieces of equipment with a total carrying value of £28.000 were sold for £16,000 during the year. Depreciation for the year was £9,000.

Mop Ltd - Statements of Financial Position at 31 December.

3 As an accountant for Fathom ltd, you are investigating discrepancies, on 31 December 2020, between the trade payables control account and the total of the list of balances for individual suppliers' accounts. The following information has been found: 

1. The trade payable control account shows a balance of £36,000 but total of individual supplier balances is £43,500, 

2. A supplier invoice for £4,000 had been included in the individual balances but omitted by mistake from the payable control account.

3. The purchase day book individual amounts for a month were correct but had been overcast by £700 in arriving at the total purchases on credit for that month. 

4. A payment to a supplier of £940 had been wrongly recorded in the cashbook as £490. 

5. An invoice received from a supplier for £320 was entered into the purchase returns day book as a credit note. 

6. An invoice for £550 had been paid twice by mistake. 

7. Discounts received of £2,100 had been correctly included in the trade payables control account but reported as a credit in the individual supplier accounts. 

8. An agreement to cancel a supplier's credit balance of £3,300 with a debit balance for the same supplier in the receivables ledger has not been recorded at all.