26. The following is the trial balance of Locke Ltd at 31 December 2020. Account name Dr Cr Sales 9,441,000 1,233,000 Other operating income Purchases 4,950,000 1,290,000 2,940,000 870,000 108,000 135,000 660,000 72,000 2,400,000 Inventory as at 1 January 2020 Administrative expenses Distribution costs Insurance expenses Heating and lighting expenses Salary expenses Rental expenses Plant and equipment Accumulated depreciation on plant and equipment as at 1 January 2020 480,000 Motor vans 150,000 Accumulated depreciation on motor vans as at 1 January 2020 Non-current investments Receivables Allowance for receivables as at 31 December 2021 Cash Tax for the year Раyables 30,000 66,000 960,000 60,000 1,100,000 88,000 8% debentures Ordinary shares (£1) Share premium Interim dividend paid Retained earnings as at 1 January 2020 945,000 1,290,000 600,000 660,000 30,000 1,080,000 Total 15,819,000 15,819,000 The following information is relevant: 1. Closing inventory at 31 December 2020 is £1,170,000. 2. Locke Ltd depreciates non-current assets as follows: Plant and equipment at 10% per annum on a straight line basis per annum Motor vans at 20% per annum on a reducing balance basis per annum 3. No heating and lighting bills for the month of December 2020 have been recorded in the accounting records. The heating and lighting invoice for 1 December 2020 to 28 February 2021 is expected to be £10,800.

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Prepare an income statement for the period ended 31 December 2020 and a balance sheet as at 31 December 2020 for Locke Ltd.

26.
The following is the trial balance of Locke Ltd at 31 December 2020.
Account name
Dr
Cr
Sales
9,441,000
1,233,000
Other operating income
Purchases
4,950,000
1,290,000
2,940,000
870,000
108,000
135,000
660,000
72,000
2,400,000
Inventory as at 1 January 2020
Administrative expenses
Distribution costs
Insurance expenses
Heating and lighting expenses
Salary expenses
Rental expenses
Plant and equipment
Accumulated depreciation on plant and equipment as at 1 January 2020
Motor vans
480,000
150,000
Accumulated depreciation on motor vans as at 1 January 2020
Non-current investments
Receivables
Allowance for receivables as at 31 December 2021
30,000
66,000
960,000
60,000
Cash
1,100,000
88,000
Tax for the year
Payables
8% debentures
Ordinary shares (£1)
Share premium
Interim dividend paid
Retained earnings as at 1 January 2020
Total
945,000
1,290,000
600,000
660,000
30,000
1,080,000
15,819,000
15,819,000
The following information is relevant:
1.
Closing inventory at 31 December 2020 is £1,170,000.
2.
Locke Ltd depreciates non-current assets as follows:
Plant and equipment at 10% per annum on a straight line basis per annum
Motor vans at 20% per annum on a reducing balance basis per annum
3.
No heating and lighting bills for the month of December 2020 have been recorded in the
accounting records. The heating and lighting invoice for 1 December 2020 to 28 February
2021 is expected to be £10,800.

4.
Locke Ltd allocates expenses as follows:
Depreciation on motor vans is allocated to distribution costs. Depreciation on
plant and equipment is allocated to administrative expenses.
Heating and lighting and salary expenses are allocated 25 per cent to
distribution costs and 75 per cent to administrative expenses.
All other expenses are included in administrative expenses.
5.
A full year's debenture interest is to be accrued.
Required:
Prepare an income statement for the period ended 31 December 2020 and a balance
sheet as at 31 December 2020 for Locke Ltd.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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