During 2019, the following transactions took place: 1 The owners withdrew £20,000 of equity as cash. 2 Premises continued to be rented at an annual rental of £20,000. During the year, rent of £15,000 was paid to the owner of the premises. 3 Rates on the premises £1,300 were paid for the period 1 April 2019 to 31 March 2020. 4 A second delivery van was bought on 1 January 2019 for £13,000. This is expected to be used in the business for four years and then to be sold for £3,000. 5 Wages totalling £36,700 were paid during the year. At the end of the year, the business owed £860 of wages for the last week of the year. 6 Electricity bills for the first three quarters of the year and £620 for the last quarter of the previous year were paid totalling £1,820. After 31 December 2019, but before the financial statements had been finalised for the year, the bill for the last quarter arrived showing a charge of £690. 7 Inventories totalling £67,000 were bought on credit. 8 Inventories totalling £8,000 were bought for cash. 9 Sales revenue on credit totalled £179,000 (cost £89,000). 10 Cash sales revenue totalled £54,000 (cost £25,000). 11 Receipts from trade receivables totalled £178,000. 12 Payments to trade payables totalled £71,000. 13 Van running expenses paid totalled £16,200. The business uses the straight-line method for depreciating non-current assets. Required: Prepare a statement of financial position as at 31 December 2019 and an income statement for the year to that date.
During 2019, the following transactions took place: 1 The owners withdrew £20,000 of equity as cash. 2 Premises continued to be rented at an annual rental of £20,000. During the year, rent of £15,000 was paid to the owner of the premises. 3 Rates on the premises £1,300 were paid for the period 1 April 2019 to 31 March 2020. 4 A second delivery van was bought on 1 January 2019 for £13,000. This is expected to be used in the business for four years and then to be sold for £3,000. 5 Wages totalling £36,700 were paid during the year. At the end of the year, the business owed £860 of wages for the last week of the year. 6 Electricity bills for the first three quarters of the year and £620 for the last quarter of the previous year were paid totalling £1,820. After 31 December 2019, but before the financial statements had been finalised for the year, the bill for the last quarter arrived showing a charge of £690. 7 Inventories totalling £67,000 were bought on credit. 8 Inventories totalling £8,000 were bought for cash. 9 Sales revenue on credit totalled £179,000 (cost £89,000). 10 Cash sales revenue totalled £54,000 (cost £25,000). 11 Receipts from trade receivables totalled £178,000. 12 Payments to trade payables totalled £71,000. 13 Van running expenses paid totalled £16,200. The business uses the straight-line method for depreciating non-current assets. Required: Prepare a statement of financial position as at 31 December 2019 and an income statement for the year to that date.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:During 2019, the following transactions took place:
1 The owners withdrew £20,000 of equity as cash.
2 Premises continued to be rented at an annual rental of £20,000. During the year, rent of
£15,000 was paid to the owner of the premises.
3 Rates on the premises £1,300 were paid for the period 1 April 2019 to 31 March 2020.
4 A second delivery van was bought on 1 January 2019 for £13,000. This is expected to be used
in the business for four years and then to be sold for £3,000.
5 Wages totalling £36,700 were paid during the year. At the end of the year, the business owed
£860 of wages for the last week of the year.
6 Electricity bills for the first three quarters of the year and £620 for the last quarter of the
previous year were paid totalling £1,820. After 31 December 2019, but before the financial
statements had been finalised for the year, the bill for the last quarter arrived showing a charge
of £690.
7 Inventories totalling £67,000 were bought on credit.
8 Inventories totalling £8,000 were bought for cash.
9 Sales revenue on credit totalled £179,000 (cost £89,000).
10 Cash sales revenue totalled £54,000 (cost £25,000).
11 Receipts from trade receivables totalled £178,000.
12 Payments to trade payables totalled £71,000.
13 Van running expenses paid totalled £16,200.
The business uses the straight-line method for depreciating non-current assets.
Required:
Prepare a statement of financial position as at 31 December 2019 and an income statement for
the year to that date.
Transcribed Image Text:ght © 2020. Pearson Education, Limited. All rights reserved.
3.6
The following is the statement of financial position of TT and Co. (see Self-Assessment Question
3.1 on page 117) at the end of its first year of trading:
Statement of financial position as at 31 December 2018
£
ASSETS
Non-current assets
Property, plant and equipment:
Delivery van at cost
Depreciation
Current assets
Inventories
Trade receivables
Prepaid expenses*
Cash
Total assets
EQUITY AND LIABILITIES
Equity
Original
Retained earnings
Current liabilities
Trade payables
Accrued expensest
12,000
(2,500)
9,500
65,000
19,600
5,300
750
90,650
100,150
50,000
26,900
76,900
22,000
1,250
23,250
100,150
Total equity and liabilities
*The prepaid expenses consisted of rates (£300) and rent (£5,000).
+The accrued expenses consisted of wages (£630) and electricity (£620).
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