Denim Ltd started trading on 1 May 2020. The trial balance at 30 April 2021 is as follows: £000 £000 £1 Ordinary shares Share premium Bank Trade payables Trade receivables Plant and equipment at cost Administrative expenses Wages Purchases 50 10 12 20 55 2 14 Sales 30 102 102 The following information was obtained after the trial balance had been prepared: (i) (ii) (iii) Inventory at 30 April 2021 is valued at £2,000. Plant and equipment is to be depreciated 10% straight line with a zero residual valu At 30 April 2021, Denim Ltd owed £3,000 for wages, and administrative expenses ha prepaid by £1,000. Bad debts of £1,000 are to be written off. A long-term bank loan of £5,000 was taken out on 30 April 2021. (iv) (v) Question 5 Prepare Denim Ltd.'s Income Statement for the year ending 30 April 2021.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Use the following information to answer questions 5 and 6:
Denim Ltd started trading on 1 May 2020. The trial balance at 30 April 2021 is as follows:
£000
£000
£1 Ordinary shares
Share premium
50
10
Bank
5
Trade payables
Trade receivables
Plant and equipment at cost
Administrative expenses
Wages
12
20
55
2
6.
Purchases
14
Sales
30
102
102
The following information was obtained after the trial balance had been prepared:
(i)
(ii)
(ii)
Inventory at 30 April 2021 is valued at £2,000.
Plant and equipment is to be depreciated 10% straight line with a zero residual value.
At 30 April 2021, Denim Ltd owed £3,000 for wages, and administrative expenses had been
prepaid by £1,000.
Bad debts of £1,000 are to be written off.
A long-term bank loan of £5,000 was taken out on 30 April 2021.
(iv)
(v)
Question 5
Prepare Denim Ltd.'s Income Statement for the year ending 30 April 2021.
Transcribed Image Text:Use the following information to answer questions 5 and 6: Denim Ltd started trading on 1 May 2020. The trial balance at 30 April 2021 is as follows: £000 £000 £1 Ordinary shares Share premium 50 10 Bank 5 Trade payables Trade receivables Plant and equipment at cost Administrative expenses Wages 12 20 55 2 6. Purchases 14 Sales 30 102 102 The following information was obtained after the trial balance had been prepared: (i) (ii) (ii) Inventory at 30 April 2021 is valued at £2,000. Plant and equipment is to be depreciated 10% straight line with a zero residual value. At 30 April 2021, Denim Ltd owed £3,000 for wages, and administrative expenses had been prepaid by £1,000. Bad debts of £1,000 are to be written off. A long-term bank loan of £5,000 was taken out on 30 April 2021. (iv) (v) Question 5 Prepare Denim Ltd.'s Income Statement for the year ending 30 April 2021.
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Income statement refers to the statement that determines the profit or loss of the entity during a particular reporting period and tells about the performance of the business.

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