3.1. Preparation of financial statements
A subsection of Accounting, 9706, through 3. Financial accounting (A Level)
Listing 10 of 678 questions
K Limited provided the following extract from the company’s draft statement of profit or loss for the year ended 31 December 2023. $ Revenue 870 500 Cost of sales (493 000) Gross profit 377 500 It has now been discovered that adjustments are required for the following: Opening inventory at 1 January 2023 had been understated by $14 000. Sales returns, $8600, had been deducted from purchases. Closing inventory at 31 December 2023 included 40 damaged items costing $30 each. It is estimated that after repairs, costing a total of $420, the items could be sold for $38 each. Explain the accounting concept which is applied to the valuation of damaged inventory. Calculate the revised gross profit for the year ended 31 December 2023. Workings: Prepare the statement of profit or loss for the year ended 31 December 2023. Start the statement with the revised figure for gross profit from . Use the space provided on page 5 to show your workings. K Limited Statement of profit or loss for the year ended 31 December 2023 $ Gross profit , , Prepare an extract from the statement of financial position at 31 December 2023 to show the equity and liabilities section only. Statement of financial position at 31 December 2023 (Extract) $ Equity and liabilities Workings: , , Additional information The directors are planning to expand the business in 2024. The expansion will be financed by one of the following options: Option A: issuing 8% debentures (2030) Option B: making a general issue of ordinary shares. Advise the directors which option they should choose. Justify your choice by discussing both options. , ,
9706_s24_qp_23
THEORY
2024
Paper 2, Variant 3
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