Blyth Traders are a well-established wholesale business operating in the north of Englandand south Scotland. Their trial balance for year ended 31" December 2021 is presentedbelow:Dr [E]Cr (E]Non-current assets (cost):Plant and machinery150,000Vehicles100,000Premises600,000Accumulated depreciation (1-1-21):Plant and equipmentVehicles90,00050,000Premises96,000SalesSales returnsPurchasesCarriage inWages and salariesDiscounts allowedElectricity costsVehicle maintenanceAdvertising and marketingIrrecoverable debts829,0002,000335,00015.000114.0004.50037.5008,0002,50014,0003,000Allowance for receivablesBank1,50019,200Accounts payableAccounts receivable31,60060,000Inventory (1-1-21)91,700DrawingsBank loan [10%]Capital (1-1-21)60,000150.000324,9001.594.7001.594.700Additional notes:1) Inventory at 31" December 2021 was valued at £94,000. However, on 4thJanuary 2022 additional lines of inventory were uncovered that had not beenincluded in the previous count. At cost this inventory would be valued at £5,000but 50% of the items were damaged and would probably fetch £500 at auction.Auction fees would be £100.2) Salary bill for Blyth is £10,000 per month.3) The electricity charge represents 15 months payment to 1 March 2022.4) Blyth pays a local garage £800 per month for maintenance and fuel costs. Arrearsto be settled by the end of the first week in 2022.5) The contract for advertising is with a newly established local company and Blythhas supported the company by settling the contract from 1 January 2021 up tothe end of April 2022.6) Blyth decides at the end of 2021 to double the allowance on receivables.7) Blyth disposed of an item of plant in 2021 for £8,000. The plant had beenpurchased in 2018 at a cost of £40,000 (Blyth charges no depreciation in year ofdisposal). This transaction has not yet been recorded in the books of Blyth.8) Depreciation rates are:Premises, straight line over 50 years- Plant, 20% straight line- Vehicles, 50% reducing balance Required:(a)Prepare a statement of profit or loss for y/e 31st December 2021 and astatement of financial position as at that date.

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Description: Blyth Traders are a well-established wholesale business operating in the north of Englandand south Scotland. Their trial balance for year ended 31" December 2021 is presentedbelow:Dr [E]Cr (E]Non-current assets (cost):Plant and machinery150,000Vehic

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Blyth Traders are a well-established wholesale business operating in the north of England and south Scotland. Their trial balance for year ended 31" December 2021 is presented below: Dr (E] Cr [£] Non-current assets (cost): Plant and machinery 150,000 Vehicles 100,000 Premises 600,000 Accumulated depreciation (1-1-21): Plant and equipment 90,000 Vehicles 50,000 Premises 96,000 Sales 829,000 Sales returns 2,000 Purchases 335,000 Carriage in Wages and salaries 15,000 114,000 Discounts allowed 4,500 Electricity costs 37,500 2,500 Vehicle maintenance 8.000

Blyth Traders are a well-established wholesale business operating in the north of England and south Scotland. Their trial balance for year ended 31" December 2021 is presented below: Dr (E] Cr [£] Non-current assets (cost): Plant and machinery 150,000 Vehicles 100,000 Premises 600,000 Accumulated depreciation (1-1-21): Plant and equipment 90,000 Vehicles 50,000 Premises 96,000 Sales 829,000 Sales returns 2,000 Purchases 335,000 Carriage in Wages and salaries 15,000 114,000 Discounts allowed 4,500 Electricity costs 37,500 2,500 Vehicle maintenance 8.000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

Topic Video

Question

Blyth Traders are a well-established wholesale business operating in the north of England
and south Scotland. Their trial balance for year ended 31" December 2021 is presented
below:
Dr [E]
Cr (E]
Non-current assets (cost):
Plant and machinery
150,000
Vehicles
100,000
Premises
600,000
Accumulated depreciation (1-1-21):
Plant and equipment
Vehicles
90,000
50,000
Premises
96,000
Sales
Sales returns
Purchases
Carriage in
Wages and salaries
Discounts allowed
Electricity costs
Vehicle maintenance
Advertising and marketing
Irrecoverable debts
829,000
2,000
335,000
15.000
114.000
4.500
37.500
8,000
2,500
14,000
3,000
Allowance for receivables
Bank
1,500
19,200
Accounts payable
Accounts receivable
31,600
60,000
Inventory (1-1-21)
91,700
Drawings
Bank loan [10%]
Capital (1-1-21)
60,000
150.000
324,900
1.594.700
1.594.700
Additional notes:
1) Inventory at 31" December 2021 was valued at £94,000. However, on 4th
January 2022 additional lines of inventory were uncovered that had not been
included in the previous count. At cost this inventory would be valued at £5,000
but 50% of the items were damaged and would probably fetch £500 at auction.
Auction fees would be £100.
2) Salary bill for Blyth is £10,000 per month.
3) The electricity charge represents 15 months payment to 1 March 2022.
4) Blyth pays a local garage £800 per month for maintenance and fuel costs. Arrears
to be settled by the end of the first week in 2022.
5) The contract for advertising is with a newly established local company and Blyth
has supported the company by settling the contract from 1 January 2021 up to
the end of April 2022.
6) Blyth decides at the end of 2021 to double the allowance on receivables.
7) Blyth disposed of an item of plant in 2021 for £8,000. The plant had been
purchased in 2018 at a cost of £40,000 (Blyth charges no depreciation in year of
disposal). This transaction has not yet been recorded in the books of Blyth.
8) Depreciation rates are:
Premises, straight line over 50 years
- Plant, 20% straight line
- Vehicles, 50% reducing balance

Required:
(a)
Prepare a statement of profit or loss for y/e 31st December 2021 and a
statement of financial position as at that date.

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