The statements of financial position of Parkway plc for 20X7 and 20X8 are given below, together with the income statement for the year ended 30 June 20X8.Statement of comprehensive income of Parkway plcfor the year ended 30 June 20X8£000Sales ………… 738,000Cost of sales ……. 620,000Gross profit ……… 118,000Notes1 The freehold land and buildings were purchased on 1 July 20X0. The company policy is to depreciate buildings over 50 years and to provide no depreciation on land.2 Depreciation on plant and machinery and motor vehicles is provided at the rate of 20% per annum on a straight-line basis.3 Depreciation on buildings and plant and equipment has been included in administration expenses, while that on motor vehicles is included in distribution expenses.4 The directors of Parkway plc have provided you with the following information relating to price rises:Required:(a) Making and stating any assumptions that are necessary, and giving reasons for those assumptions, calculate the monetary working capital adjustment for Parkway plc.(b) Critically evaluate the usefulness of the monetary working capitaladjustment.
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The statements of financial position of Parkway plc for 20X7



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