The directors of Solar Bubble plc, a trading company, have asked the company’s chief accountant to prepare a draft income statement for the year ending 31 January 2013 in time for them to discuss it at their board meeting on 15th February. The directors prefer to have the information presented in the same way as in the annual financial statements.
Notes
1 £6000 has to be accrued in respect of sales commission for the year ending 31 January 2013.
2 The corporation tax charge for the year is estimated at £60 625.
3 A preference dividend on the £10 000 8% preference shares was paid. The preference dividend is to be treated as a finance cost because the preference shares are treated as a liability in the statement of financial position.
4 Of the administrative expenses, £1270 relates to prepayment of insurance.
4. The chief accountant will be using the following format for the draft income statement:
turnover
cost of sales
gross profit or loss
selling and distribution costs
administrative expenses
operating profit
finance costs
profit or loss before tax
tax on profit or loss
profit or loss for the year.
Required: prepare the draft income statement for Solar Bubble plc for the year ending 31 January 2013.