Question
Presented below is the trial balance of Oakridge Ltd. at December 31, 2027.
Oakridge Ltd. Trial Balance December 31, 2027 |
|---|
| Debit | Credit |
| Purchase Discounts | | 12,000 |
| Cash | 227,640 | |
| Accounts Receivable | 126,000 | |
| Rent Revenue | | 21,600 |
| Retained Earnings | | 192,000 |
| Salaries and Wages Payable | | 21,600 |
| Sales Revenue | | 1,320,000 |
| Notes Receivable | 132,000 | |
| Accounts Payable | | 58,800 |
| Accumulated Depreciation - Equipment | | 33,600 |
| Sales Discounts | 17,400 | |
| Sales Returns and Allowances | 21,000 | |
| Notes Payable | | 84,000 |
| Selling Expenses | 278,400 | |
| Administrative Expenses | 118,800 | |
| Share Capital - Ordinary | | 360,000 |
| Income Tax Expense | 64,680 | |
| Cash Dividends | 54,000 | |
| Allowance for Doubtful Accounts | | 6,000 |
| Supplies | 16,800 | |
| Freight-In | 24,000 | |
| Land | 84,000 | |
| Equipment | 168,000 | |
| Bonds Payable | | 120,000 |
| Gain on Sale of Land | | 36,000 |
| Accumulated Depreciation - Buildings | | 23,520 |
| Inventory | 106,800 | |
| Buildings | 117,600 | |
| Purchases | 732,000 | ______ |
| Totals | 2,289,120 | 2,289,120 |
A physical count of inventory on December 31 resulted in an inventory amount of $76,800; thus cost of goods sold for 2027 is $774,000.
Instructions: Prepare an Income Statement. Assume that thirty thousand ordinary shares were outstanding during the year.
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IAS 33 — Earnings per Share
Basic EPS is profit attributable to ordinary shareholders divided by the weighted average number of ordinary shares outstanding. Both halves need care: the numerator is after preference dividends, and the denominator weights each share issue by the fraction of the year it was outstanding.
Common mistakes
- Using the closing share count instead of the weighted average.
- Failing to deduct preference dividends from profit before dividing.
- Time-weighting a bonus issue or share split — these are treated as though they existed for the whole of every period presented, including comparatives.