Question

1 (a) The following information relates to George Ltd and has been taken from their books as at 31 August 2019: Sale Administration expenses Cost of sales Taxation for the year Interest paid Interest received Distribution costs 1,800,000 250,000 500,000 150,000 25,000 5,000 300,000 Required: Prepare the income statement of George Ltd for the year ended 31 August 2019. (b) From the following details draw up the trading account of KGM Ltd for the year ended 31 December 2019. Carriage inwards Returns outwards Returns inwards Sales Purchases Stocks of good: 31 December 2019 670 495 890 38,742 33,333 7,489 Draw up the Trading Account

Answer 1

Amount George Itd Income Statement Particulars Amount Sales £1,800,000 Interest Received £ 5,000 Total Revenue To Purchases £33,333 To Return outward -£ 495 Net Purchases To Carriage Inward To Gross Profit George Itd Trading Account By Sales £38,742 By Return Inward -£ 890 £ 32,838 Net Sales £ 670 By Closing Stock £11,833 £45,341 £ 37,852 £ 7,489 £1,805,000 £45,341 Expenses Cost of sales -£ 500,000 500 000 Administration Expenses -£250,000 Distribution Costs -£ 300,000 Total Expenses Profit Before tax Taxation for the year Net Income -£1,050,000 £ 755,000 -£ 150,000 £ 605,000