Boost your Grades with us today!


London Ltd is a trading company located in England. Detailed below is the trial balance relating to the year ended on 30 September 2019.

Debit (£000) Credit (£000)


purchases 90
Inventory at 1 October 2018 60
machinery at cost 150

Provision of doubtful receivables

Rental income received 40
trade receivable 110
bank balance 30
wages 180
telephone bill 30
Financial expenses 20
disposal of machinery 30

Unallocated pension


distribution 20
Administrative expenses 60
the program at cost 100
Buildings at cost 300
share capital 586
return inward 50
Director’s fee 48
Trade payables 80
10% Bank Loan 40
Total 1,284 1,284

– Additional Information:

1. The accumulated depreciation of building is estimated at £60,000. The remaining useful life is 10 years and residual value is nil.

2. London Ltd decided to adopt 20% reducing balance of depreciation charge on machinery. The accumulated depreciation of machinery is £40,000 at the end of this financial year.

3. The inventory at 30 September 2019 is valued at £75,000.

4. The value of program purchased remains unchanged during the financial year and London Ltd decided to depreciate program over ten-year useful life (Assuming residual value is zero)

5. After several meetings, the financial director confirmed that depreciation of buildings should be split 50:50 between administrative expense and distribution cost, the depreciation of machinery should be split 50:50 between distribution cost and administrative expense and depreciation of program should be split equally between distribution cost and administrative expense.

6. In 2019, a distribution vehicle which had cost £68,000 in 2016 was sold for £30,000. This amount was debited to the bank account and credited to a disposal account, but no further entries have yet been made with regard to this disposal, no depreciation is charged in the year of disposal.

7. Rental income received relates to two years ending 30 September 2020. The London Ltd decided to recognize rental income when receivable, the firm has received the income of £261,321.

8. The £50,000 of receivables are bad debts and the provision for doubtful receivable adjusted to 3% of the remaining receivables.

9. Unallocated pension contributions should be split equally between financial expenses and distribution.

10. The London Ltd has acquired 10% bank loan at the beginning of this financial year and the London Ltd also paid interest of Debentures £6,000. Both interest expenses have not been recognized

11. The insurance payment has been made for the quarter ended 31 December 2019, which is £6,000. The insurance expense is treated as general administrative expenses in this firm.

12. Corporation tax expense for current financial year is estimated to be £12,000, however, this tax expense has been underestimated by £10,000 for FY2018.

13. The director’s fee is treated as general administrative expense, the wages should be split equally between distribution cost and administrative expense.


a. Prepare a statement of income in a form that complies with IAS 1. for London Ltd. No notes to the accounts are required. You need to show all workings clearly.

b. The revenue figure is inclusive of sales to a customer on 20 September 2019. £400 worth of these goods was returned on 29 September 2019 for defects, but this was not adjusted in the accounts. Discuss which qualitative characteristics is compromised.


15% off for this assignment.

Our Prices Start at $11.99. As Our First Client, Use Coupon Code GET15 to claim 15% Discount This Month!!

Why US?

100% Confidentiality

Information about customers is confidential and never disclosed to third parties.

Timely Delivery

No missed deadlines – 97% of assignments are completed in time.

Original Writing

We complete all papers from scratch. You can get a plagiarism report.

Money Back

If you are convinced that our writer has not followed your requirements, feel free to ask for a refund.