im Yee is preparing the financial statements for her business for the year ended 31 December 2010. The trading section of the income statement (trading and profit and loss account) showed a gross profit of £49 767. im Yee has extracted the following balances from the business books of account in order to complete the income statement (profit and loss account). Rent received Bad debts Operating expenses Wages Fixtures and fittings at cost Motor van at cost at 1 January 2010 Provision for depreciation - motor van at 1 January 2010 Trade receivables (debtors) at 31 December 2010 Provision for doubtful debts at 1 January 2010 Additional information £ 5 460 740 35 476 18 460 25 800 18 000 11 520 32 400 869
im Yee is preparing the financial statements for her business for the year ended 31 December 2010. The trading section of the income statement (trading and profit and loss account) showed a gross profit of £49 767. im Yee has extracted the following balances from the business books of account in order to complete the income statement (profit and loss account). Rent received Bad debts Operating expenses Wages Fixtures and fittings at cost Motor van at cost at 1 January 2010 Provision for depreciation - motor van at 1 January 2010 Trade receivables (debtors) at 31 December 2010 Provision for doubtful debts at 1 January 2010 Additional information £ 5 460 740 35 476 18 460 25 800 18 000 11 520 32 400 869
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Yim Yee is preparing the financial statements for her business for the year ended
31 December 2010. The trading section of the income statement (trading and profit and loss
account) showed a gross profit of £49 767.
Yim Yee has extracted the following balances from the business books of account in order to
complete the income statement (profit and loss account).
Rent received
Bad debts
£
5 460
740
35 476
18 460
25 800
18 000
11 520
Operating expenses
Wages
Fixtures and fittings at cost
Motor van at cost at 1 January 2010
Provision for depreciation - motor van at 1 January 2010
Trade receivables (debtors) at 31 December 2010
Provision for doubtful debts at 1 January 2010
Additional information
(1) Included in Yim Yee's closing inventory (stock) were goods which cost £1000. These
have been damaged and will have to be destroyed.
32 400
869
(2)
Yim Yee has taken goods for her own use from the business. The goods cost £857 and
would have been sold for £1200.
(3) Yim Yee rents part of her premises to another business and she is owed £460 in rent at
31 December 2010.
(4) Included in the total for operating expenses is £389 paid for the year ended
31 December 2011 and a payment of £5000 for the purchase of fixtures.
(5) Wages for the final week of December 2010 amounting to £355 had not been paid at
31 December 2010.
(6) Yim Yee sold the motor van on 30 April 2010. She received £4450. She had purchased
the van on 1 January 2008. It is her policy to depreciate the motor van using the reducing
balance method at the rate of 40% per annum. A full year's depreciation is charged in the
year of disposal.
(7)
Fixtures and fittings are depreciated using the straight-line method at the rate of
15% per annum.
(8)
It is Yim Yee's policy to maintain the provision for doubtful debts at 2.5% of trade
receivables (debtors).
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