Question 1 Hala Ahmed is a sole trader. Here is her trial balance as at 31 December 2019. Trial balance for Hala Ahmed as at 31 December 2019 Debit £ Capital Drawings Bank loan Cash at bank Equipment at cost Accumulated depreciation- Equipment Fixtures at cost Accumulated depreciation- Fixtures Receivables Allowance for receivables Payables Inventory (as at 1 January 2019) Sales Purchases Insurance 80,000 176,625 25,000 175,000 465,000 180,000 1,600,000 9,000 50,000 37,500 38,500 2.836.625 Credit £ 96,500 250,000 12,000 83,125 10,000 525,000 1,860,000 Rent Loan interest Miscellaneous expenses Total Additional information is provided for use in preparing the company's adjustments: 1. The value of closing inventory is £340,000. 2. There is an accrual for rent of £10,000. 2.836.625 3. On March 1, 2019, the company purchased a 12-month insurance policy for £9,000. 4. Office equipment has a residual value of £1,000. It is to be depreciated on a straight-line basis at a rate of 25 percent. 5. Fixtures are to be depreciated on the reducing balance basis at a rate of 20 percent. 6. The Majestic Hotel is one of Hala's best customers. It has just been declared bankrupt. The hotel owes Hala £65,000. 7. The allowance for receivables is to be set at ten per cent of outstanding receivables as at 31 December 2019. Required: 1. Make the end-of-period adjustments entries 2. Prepare Hala's income statement for the year ended December 31, 2019. 3. How much is the closing balance of capital at the end of 2019? Show computations
Question 1 Hala Ahmed is a sole trader. Here is her trial balance as at 31 December 2019. Trial balance for Hala Ahmed as at 31 December 2019 Debit £ Capital Drawings Bank loan Cash at bank Equipment at cost Accumulated depreciation- Equipment Fixtures at cost Accumulated depreciation- Fixtures Receivables Allowance for receivables Payables Inventory (as at 1 January 2019) Sales Purchases Insurance 80,000 176,625 25,000 175,000 465,000 180,000 1,600,000 9,000 50,000 37,500 38,500 2.836.625 Credit £ 96,500 250,000 12,000 83,125 10,000 525,000 1,860,000 Rent Loan interest Miscellaneous expenses Total Additional information is provided for use in preparing the company's adjustments: 1. The value of closing inventory is £340,000. 2. There is an accrual for rent of £10,000. 2.836.625 3. On March 1, 2019, the company purchased a 12-month insurance policy for £9,000. 4. Office equipment has a residual value of £1,000. It is to be depreciated on a straight-line basis at a rate of 25 percent. 5. Fixtures are to be depreciated on the reducing balance basis at a rate of 20 percent. 6. The Majestic Hotel is one of Hala's best customers. It has just been declared bankrupt. The hotel owes Hala £65,000. 7. The allowance for receivables is to be set at ten per cent of outstanding receivables as at 31 December 2019. Required: 1. Make the end-of-period adjustments entries 2. Prepare Hala's income statement for the year ended December 31, 2019. 3. How much is the closing balance of capital at the end of 2019? Show computations
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hala Ahmed is a sole trader. Here is her trial balance as at 31 December 2019..
Trial balance for Hala Ahmed as at 31 December 2019
Debit
£
Capital
Drawings
Bank loan
Cash at bank
Equipment at cost
Accumulated depreciation- Equipment
Fixtures at cost
Accumulated depreciation- Fixtures
Receivables
Allowance for receivables
Payables
Inventory (as at 1 January 2019)
Sales
Purchases
Insurance
Rent
Loan interest
Miscellaneous expenses
80,000
176,625
25,000
175,000
465,000
180,000
1,600,000
9,000
50,000
37,500
38,500
2.836.625
Credit
£
96,500
250,000
12,000
83,125
10,000
525,000
1,860,000
Total
Additional information is provided for use in preparing the company's adjustments:
1. The value of closing inventory is £340,000.
2. There is an accrual for rent of £10,000.
2,836,625
3. On March 1, 2019, the company purchased a 12-month insurance policy for £9,000.
4. Office equipment has a residual value of £1,000. It is to be depreciated on a straight-line
basis at a rate of 25 percent.
5. Fixtures are to be depreciated on the reducing balance basis at a rate of 20 percent.
6. The Majestic Hotel is one of Hala's best customers. It has just been declared bankrupt.
The hotel owes Hala £65,000.
7. The allowance for receivables is to be set at ten per cent of outstanding receivables as at
31 December 2019.
Required:
1. Make the end-of-period adjustments entries
2. Prepare Hala's income statement for the year ended December 31, 2019.
3. How much is the closing balance of capital at the end of 2019? Show computations
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