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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Question:
Prepare the correct Income Statement and Statement of Financial Position
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
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