Construction Finance

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Construction Finance

A.                                 Company A: Income statement for the year ended ***

Revenue

Contract price               1,000,000

Less: Work In Progress 150,000

850,000

Contract price paid for 80% of 850,000= 680,000

680,000

Less: cost of goods Sold

Opening stock of materials: 50,000

Less Closing stock of materials to arrive at purchases value:       80,000

Purchases                                                                                            (30,000)

Gross Revenue                                  650,000

Expenses

Depreciation of Plant   40,000

Plant Hire                     60,000

Wages and Salaries        200,000

Accrued Wages              100,000

Less:         Total expenses                                                                        (400,000)

Pre-Tax Profits                                                         250,000                 

Less Tax    at 30% of net income                                        (50,000)

Profits after Tax                                                                  200,000

Less Dividends payable at 40%                                          40,000

Retained Earnings                                                                 160,000

Balance sheet

Fixed assets                    Cost                         Depreciation          Net Book Value

Fixed Plant                    200,000                        40,000                    160,000

Land and Buildings      100,000                           _                          100,000

Total Fixed assets                                                                 260,000

Current assets

Cash at Bank                                                                            80,000

Total assets                                                                                          340,000

Liabilities

Loan repayable           10,000

Capital

Share capital                 250,000

General Reserves           80,000

340,000

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