Homework Help is Here – Start Your Trial Now!
Business
Accounting
2. 1. Layla introduced £50,000 of capital, which was paid into a bank account opened in the name of the business. Premises were rented from 1 January 2021 at an annual rental of £20,000. During the year, rent of £25,000 was paid to the owner of the premises. 3. Rates (a tax on business premises) were paid during the year as follows: a. b. 5. 6. For the period 1 January 2021 to 31 March 2021 € 500 For the period 1 April 2021 to 31 March 2022 £1,200 4. A delivery van was bought on 1 January 2021 for £12,000. This is expected to be used in the business for four years and then to be sold for £2,000. Wages totalling €33,500 were paid during the year. At the end of the year, the business owed £630 of wages for the last week of the year. Electricity bills for the first three quarters of the year were paid totalling £1,650. After 31 December 2021, but before

2. 1. Layla introduced £50,000 of capital, which was paid into a bank account opened in the name of the business. Premises were rented from 1 January 2021 at an annual rental of £20,000. During the year, rent of £25,000 was paid to the owner of the premises. 3. Rates (a tax on business premises) were paid during the year as follows: a. b. 5. 6. For the period 1 January 2021 to 31 March 2021 € 500 For the period 1 April 2021 to 31 March 2022 £1,200 4. A delivery van was bought on 1 January 2021 for £12,000. This is expected to be used in the business for four years and then to be sold for £2,000. Wages totalling €33,500 were paid during the year. At the end of the year, the business owed £630 of wages for the last week of the year. Electricity bills for the first three quarters of the year were paid totalling £1,650. After 31 December 2021, but before

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Question:

Prepare the correct Income Statement and Statement of Financial Position

1. 2. 3. 4. 5. 6. 7. 8. Layla introduced £50,000 of capital, which was paid into a bank account opened in the name of the business. Premises were rented from 1 January 2021 at an annual rental of £20,000. During the year, rent of £25,000 was paid to the owner of the premises. Rates (a tax on business premises) were paid during the year as follows: Wages totalling £33,500 were paid during the year. At the end of the year, the business owed £630 of wages for the last week of the year. Electricity bills for the first three quarters of the year were paid totalling £1,650. After 31 December 2021, but before the financial statements had been finalised for the year, the bill for the last quarter arrived showing a charge of £620. Inventories totalling £143,000 were bought for credit. Inventories totalling £12,000 were bought for cash. 9. Sales revenue on credit totalled £152,000 (cost of sales £74,000). 10. Cash sales revenue totalled £35,000 (cost of sales £16,000). 11. Receipts from trade receivables totalled £143,000. 12. Payments to trade payables totalled £121,000. 13. Van running expenses paid totalled £9,400. 14. She took out government interest free loan of £33,500 in 1 December 2021. a. b. £1,200 A delivery van was bought on 1 January 2021 for £12,000. This is expected to be used in the business for four years and then to be sold for £2,000. For the period 1 January 2021 to 31 March 2021 € 500 For the period 1 April 2021 to 31 March 2022 At the end of the year it was clear that a trade debtor who owed £400 would not be able to pay any part of the debt. The business uses the straight-line method for depreciating non-current assets. Layla Bright Income statement for the year ended 31 December 2021 Assets Sales revenue Less Cost of Sales (74,000 + 16,000) Gross Profit Less Rent Rates Wages Electricity Van expenses Net profit for the year Layla Bright Statement of Financial Position as at 31 December 2021 Delivery van (12,000 - 2,500) Inventories Trade receivables Cash at bank £ £ 20,000 1,200 33,500 1,650 2,500 Claims £ 152,000 90,000 62,000 12,000 Capital 143,000 Income account 152,000 Trade payables 50,000 357,000 58,850 3,150 £ 50,000 164,000 143,000 357,000 Since Layla could not balance the statement of Financial position, she inserted Income account and put the balancing figure
Transcribed Image Text:1. 2. 3. 4. 5. 6. 7. 8. Layla introduced £50,000 of capital, which was paid into a bank account opened in the name of the business. Premises were rented from 1 January 2021 at an annual rental of £20,000. During the year, rent of £25,000 was paid to the owner of the premises. Rates (a tax on business premises) were paid during the year as follows: Wages totalling £33,500 were paid during the year. At the end of the year, the business owed £630 of wages for the last week of the year. Electricity bills for the first three quarters of the year were paid totalling £1,650. After 31 December 2021, but before the financial statements had been finalised for the year, the bill for the last quarter arrived showing a charge of £620. Inventories totalling £143,000 were bought for credit. Inventories totalling £12,000 were bought for cash. 9. Sales revenue on credit totalled £152,000 (cost of sales £74,000). 10. Cash sales revenue totalled £35,000 (cost of sales £16,000). 11. Receipts from trade receivables totalled £143,000. 12. Payments to trade payables totalled £121,000. 13. Van running expenses paid totalled £9,400. 14. She took out government interest free loan of £33,500 in 1 December 2021. a. b. £1,200 A delivery van was bought on 1 January 2021 for £12,000. This is expected to be used in the business for four years and then to be sold for £2,000. For the period 1 January 2021 to 31 March 2021 € 500 For the period 1 April 2021 to 31 March 2022 At the end of the year it was clear that a trade debtor who owed £400 would not be able to pay any part of the debt. The business uses the straight-line method for depreciating non-current assets. Layla Bright Income statement for the year ended 31 December 2021 Assets Sales revenue Less Cost of Sales (74,000 + 16,000) Gross Profit Less Rent Rates Wages Electricity Van expenses Net profit for the year Layla Bright Statement of Financial Position as at 31 December 2021 Delivery van (12,000 - 2,500) Inventories Trade receivables Cash at bank £ £ 20,000 1,200 33,500 1,650 2,500 Claims £ 152,000 90,000 62,000 12,000 Capital 143,000 Income account 152,000 Trade payables 50,000 357,000 58,850 3,150 £ 50,000 164,000 143,000 357,000 Since Layla could not balance the statement of Financial position, she inserted Income account and put the balancing figure
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS