Case Study for Annual Report Assignment
The following details are taken from the accounting records of the company as at 30 June 2014:
(a) Information about the company's share issues is as follows:
• 23 September 2008 - At the commencement of business, the company issued 2,500,000 ordinary shares at an issue price of $3.50 each, fully paid, incurring $30,000 in share issue costs.
• 1 August 2012 - The company issued bonus shares at 1 bonus share (at an issue price of $2.00 each) for every 5 ordinary shares held.
• 31 March 2014 - To raise additional funds the company issued 500,000 ordinary shares at an issue price of $2.75 each, incurring share issue costs of $17,500. $2.00 per share was due on application and $0.75 per share was due in one future call. The future call for $0.75 was made on 31 May 2014 with all monies received by 30 June 2014.
(b) Included in the amount of ‘Other Expenses' in the trial balance above are:
• Employee benefits expenses of:
• $1,100,000 for salaries
• $6,500,000 for wages
• $703,000 for employee superannuation
• $445,000 long service leave expense (the opening balance [1 July 2013] of the long service leave provision was $830,000)
• $565,000 annual leave expense (the opening balance [1 July 2013] of the annual leave provision was $1,100,000)
• $3,950,000 utilities costs (gas, electricity, and water)
• $435,000 telecommunications expenses (telephone and internet)
• $145,000 payment to auditors: This includes $100,000 for audit services and $45,000 for business advisory services
• Interest expenses of:
• $125,000 for interest paid (i.e. in cash) on a loan. The loan is a $5,000,000 loan from Rich Bank. The loan term began on 1 November 2013 and ends on 31 October 2018. The loan's interest rate is 5% per annum (1.25% simple interest on the outstanding principal every quarter) and is payable every quarter.
(on 31 January, 30 April, 31 July, and 31 October each year). In addition to this, a principal repayment of $1,000,000 is due each year on 31 October (with the first payment of principal to be made on 31 October 2014).
• $2,500 for interest paid on bank overdraft for the month of May. The company has had an overdraft for the last two months of the financial year (i.e. May and June). Interest is calculated on the overdraft based on the balance at the end of the month (i.e. at 31 May and 30 June). The interest is then paid on the first day of the next month (i.e. on 1 June and 1 July). The interest accrued at the 30 June 2014 (that was paid on 1 July 2014) was $2,750 (this has not been included in other expenses at 30 June: refer (g)).