www.dynamicpapers.

com
14

4 The directors of DW Limited provided the following information at 30 September 2020.

$
6% debentures (2028) 18 000
Bank overdraft 6 450
Dividend paid 2 000
General reserve at 1 October 2019 6 500
Inventory at 30 September 2020 26 300
Issued share capital at 1 October 2019 200 000
Non-current assets at 30 September 2020
Cost 462 000
Provision for depreciation 106 000
Other payables 2 200
Other receivables 1 600
Provision for doubtful debts at 1 October 2019 625
Retained earnings 73 475
Trade payables 8 250
Trade receivables 14 500

Additional information

A draft income statement for the year ended 30 September 2020 was prepared showing a profit of
$84 900.

The following errors were later discovered.

1 Inventory of $26 300 included items valued at cost $5200 that needed repair. After repairs
costing $600, the items could be sold for $5000.

2 Operating expenses included insurance of $400 that was prepaid at 30 September 2020.

3 The provision for doubtful debts should have been adjusted so that it equals 5% of trade
receivables.

The directors decided to transfer $5000 to general reserve.

There was no change to the issued share capital during the year ended 30 September 2020.

REQUIRED

(a) Calculate the correct value of inventory at 30 September 2020.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

............................................................................................................................................. [2]

© UCLES 2020 0452/21/O/N/20

 www.dynamicpapers.com
15

(b) Calculate the revised profit for the year ended 30 September 2020 after adjusting for
errors 1–3.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

............................................................................................................................................. [4]

(c) Prepare the statement of changes in equity for the year ended 30 September 2020.

DW Limited
Statement of Changes in Equity for the year ended 30 September 2020
Details Share General Retained Total
capital reserve earnings
$ $ $ $
On 1 October 2019 .................. .................. .................. ..................

..................................................... .................. .................. .................. ..................

..................................................... .................. .................. .................. ..................

..................................................... _________ _________ _________ _________

On 30 September 2020 ..................

_________ ..................
_________ ..................
_________ ..................
_________
[5]

© UCLES 2020 0452/21/O/N/20 [Turn over

 www.dynamicpapers.com
16

(d) Prepare the statement of financial position at 30 September 2020.

DW Limited
Statement of Financial Position at 30 September 2020
$ $ $

............................................................................ ...................... ...................... ......................

............................................................................ ...................... ...................... ......................

............................................................................ ...................... ...................... ......................

............................................................................ ...................... ...................... ......................

............................................................................ ...................... ...................... ......................

............................................................................ ...................... ...................... ......................

............................................................................ ...................... ...................... ......................

............................................................................ ...................... ...................... ......................

............................................................................ ...................... ...................... ......................

............................................................................ ...................... ...................... ......................

............................................................................ ...................... ...................... ......................

............................................................................ ...................... ...................... ......................

............................................................................ ...................... ...................... ......................

............................................................................ ...................... ...................... ......................

............................................................................ ...................... ...................... ......................

............................................................................ ...................... ...................... ......................

............................................................................ ...................... ...................... ......................

............................................................................ ...................... ...................... ......................

............................................................................ ...................... ...................... ......................

............................................................................ ...................... ...................... ......................

............................................................................ ...................... ...................... ......................

[9]

[Total: 20]

© UCLES 2020 0452/21/O/N/20