The following Unadjusted Trial Balance of LA Bella Ltd at 30 June 2013 contained the following
information:
LA BELLA LTD
Unadjusted Trial Balance
As at 30 June 2013
Accounts Name Debit ($) Credit($)
Ordinary Share Capital ( 400000 Shares issued for $1) 400 000
Share Issue costs 13000
Preference Share Capital ( 500000 Shares issued for $1) 500 000
Retained Profits (1/7/2012) 50 000
General Reserve 65 000
Asset revaluation Reserve 100000
Sales of Goods 1545000
Sales Returns and Allowance 5 000
Cost of Goods Sold (COGS) 942 800
Freight Inwards 6 000
Freight Outwards 7 000
Services Revenue 260 000
Gross proceeds on sale of office furniture 20 000
Advertising Expenses 10 000
Sales Staff’s salaries 200 000
Sales staff’s vehicle expenses 15 000
Administrative staff’s salaries 193 000
Sales Discount Allowed 10 000
Interest expenses 1 200
Rates expense 15 000
Carrying amount of office furniture sold 17 000
Goods and Services Tax (GST) expense 12 500
Cash 64 000
Accounts Receivable 220 000
Allowance for Doubtful Debts 5 000
Inventory 250 000
Prepaid Insurance 20 000
Prepaid Rent 18 500
Land (at cost) 100 000
Retail store at fair value 500 000
Motor Vehicles (at cost) 300 000
Store equipment (at cost) 60 000
Office furniture ( at cost) 90 000
Accumulated depreciation – retail store 100 000
Accumulated depreciation – motor vehicles 150 000
Accumulated depreciation – store equipment 15 000
Accumulated depreciation – office furniture 20 000
Goodwill ( at cost) 140 000
Research and development costs 100 000
Accounts payable 60 000
Loan Payable 12 000
GST Payable 8 000
3310000 33100002
Additional Information
The following balance-day adjustments are yet to be made to the trial balance before financial statements can
be prepared:
a) Write off bad debts of $2000 and then increase the allowance for doubtful debts to 5% of accounts
receivable
b) Transfer $ 10 000 of retained profits to the general reserve
c) Recognise depreciation and amortisation as follows: motor vehicles 10% on cost; office equipment
20% on cost; goodwill 5% of recorded amount; research and development costs 10% of recorded
amount. The sale of office furniture occurred early in July 2012 and is not depreciated during the
current year
d) After charging depreciation on the retail store, revalue the store to fair value at 30 June 2013 of
$ 435 000
e) Accrued expenses to be recorded: sales staff’s salaries $5 000; administrative staff’s salaries $4 000;
interest on loan $300
f) Prepayments require adjustment to recognise rent expense of $16 500 and Insurance expense of $16
000. The company rents part of an office block for administrative purposes.
g) Provide for income tax at the rate of 30% of the profit for the year.
h) Provide for a final divided on ordinary shares at 20c per share and a dividend of 8% on preference
shares.
Required:
A. Prepare adjusting journal entries to record items (a) to (h) above and prepare
the adjusted trail balance
B. Prepare the profit and loss statement for the year ended 30 June 2013 for LA
Bella Ltd. Classify expenses according to the following functions :
o Selling
o Administrative
o Financial
C. Prepare the appropriation statement for LA Bella Ltd at that time
D. Prepare the balance sheet for LA Bella Ltd as at 30 June 2013
information:
LA BELLA LTD
Unadjusted Trial Balance
As at 30 June 2013
Accounts Name Debit ($) Credit($)
Ordinary Share Capital ( 400000 Shares issued for $1) 400 000
Share Issue costs 13000
Preference Share Capital ( 500000 Shares issued for $1) 500 000
Retained Profits (1/7/2012) 50 000
General Reserve 65 000
Asset revaluation Reserve 100000
Sales of Goods 1545000
Sales Returns and Allowance 5 000
Cost of Goods Sold (COGS) 942 800
Freight Inwards 6 000
Freight Outwards 7 000
Services Revenue 260 000
Gross proceeds on sale of office furniture 20 000
Advertising Expenses 10 000
Sales Staff’s salaries 200 000
Sales staff’s vehicle expenses 15 000
Administrative staff’s salaries 193 000
Sales Discount Allowed 10 000
Interest expenses 1 200
Rates expense 15 000
Carrying amount of office furniture sold 17 000
Goods and Services Tax (GST) expense 12 500
Cash 64 000
Accounts Receivable 220 000
Allowance for Doubtful Debts 5 000
Inventory 250 000
Prepaid Insurance 20 000
Prepaid Rent 18 500
Land (at cost) 100 000
Retail store at fair value 500 000
Motor Vehicles (at cost) 300 000
Store equipment (at cost) 60 000
Office furniture ( at cost) 90 000
Accumulated depreciation – retail store 100 000
Accumulated depreciation – motor vehicles 150 000
Accumulated depreciation – store equipment 15 000
Accumulated depreciation – office furniture 20 000
Goodwill ( at cost) 140 000
Research and development costs 100 000
Accounts payable 60 000
Loan Payable 12 000
GST Payable 8 000
3310000 33100002
Additional Information
The following balance-day adjustments are yet to be made to the trial balance before financial statements can
be prepared:
a) Write off bad debts of $2000 and then increase the allowance for doubtful debts to 5% of accounts
receivable
b) Transfer $ 10 000 of retained profits to the general reserve
c) Recognise depreciation and amortisation as follows: motor vehicles 10% on cost; office equipment
20% on cost; goodwill 5% of recorded amount; research and development costs 10% of recorded
amount. The sale of office furniture occurred early in July 2012 and is not depreciated during the
current year
d) After charging depreciation on the retail store, revalue the store to fair value at 30 June 2013 of
$ 435 000
e) Accrued expenses to be recorded: sales staff’s salaries $5 000; administrative staff’s salaries $4 000;
interest on loan $300
f) Prepayments require adjustment to recognise rent expense of $16 500 and Insurance expense of $16
000. The company rents part of an office block for administrative purposes.
g) Provide for income tax at the rate of 30% of the profit for the year.
h) Provide for a final divided on ordinary shares at 20c per share and a dividend of 8% on preference
shares.
Required:
A. Prepare adjusting journal entries to record items (a) to (h) above and prepare
the adjusted trail balance
B. Prepare the profit and loss statement for the year ended 30 June 2013 for LA
Bella Ltd. Classify expenses according to the following functions :
o Selling
o Administrative
o Financial
C. Prepare the appropriation statement for LA Bella Ltd at that time
D. Prepare the balance sheet for LA Bella Ltd as at 30 June 2013
