Below is the trial balance of Tom’s Tents at 5 April 2018.
£ |
£ |
|
Trading account: |
||
Sales |
1,125,000 |
|
Opening inventory at 6 April 2017 |
150,000 |
|
Purchases |
590,000 |
|
Carriage inwards |
1,250 |
|
Other revenues and expenses: |
||
Income from repair services |
2,250 |
|
Rent |
28,000 |
|
Insurance |
7,500 |
|
Advertising expense |
6,400 |
|
Heating and lighting |
5,900 |
|
Shop and office expenses |
44,000 |
|
Salaries and wages |
65,500 |
|
Discounts allowed |
3,500 |
|
Carriage outwards |
3,200 |
|
Balance sheet accounts: |
||
Fixtures and fittings at cost |
140,000 |
|
Fixtures and fittings - accumulated depreciation 6th April 2017 |
28,000 |
|
Motor vehicles at cost |
100,000 |
|
Motor vehicles - accumulated depreciation 6th April 2017 |
50,000 |
|
Receivables |
85,500 |
|
Allowance for receivables 6th April 2017 |
4,000 |
|
Bank |
51,000 |
|
Payables |
32,500 |
|
Loan |
20,000 |
|
Capital |
100,000 |
|
Drawings |
80,000 |
|
1,361,750 |
1,361,750 |
The following information is relevant.
1. The closing inventory at 5 April 2018 is valued at £143,000.
2. On 5 January 2018 Tom sold a motor vehicle for £12,000. The customer was due to pay Tom’s Tents on 5 April 2018 but had not paid at the year end. This disposal has not been recorded in the accounts. This motor vehicle had been bought on 6 April 2015 for £25,000.
3. On 6 January 2018, Tom bought a new motor vehicle on credit for £30,000. At the year-end Tom had still not paid for this motor vehicle and the transaction had not been recorded in the accounts.
4. Depreciation on motor vehicles is provided at 20% per annum using the reducing balance basis on a monthly pro-rata basis. Depreciation on fixtures and fittings is provided at 10% per annum on the straight line basis, assuming no residual value. There were no purchases or disposals of fixtures and fittings during the year.
5. Tom estimates that £6,000 due from customers will be irrecoverable and must be written off.
6. The allowance for receivables is to be set at 5% of net receivables at 5 April 2018.
7. Rent includes a prepayment of £2,000.
8. Insurance includes a prepayment of £700.
9. The heating bill will arrive on 5 May 2018 and about £500 is expected to relate to the period until 5 April 2018.
10. The long-term loan is repayable in 5 years’ time. Interest payable on the loan is 6% and will be paid once per year.
Required:
a.Prepare the income statement for Tom’s Tents for the period ended 5 April 2018. Show your workings, including a full non-current assets note.
(25 marks)
b.Prepare the balance sheet for Tom’s Tents as at 5 April 2018. Show your workings.
(15 marks)
Below is the trial balance of Tom’s Tents at 5 April 2018. £ £ Trading account:...
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