Question 2 ABC company is a small engineering firm. The following balances have been extracted from the accounts as at 31 December 2021. DR CR Capital Bank Transportation-in Transportation-out Sales and Purchases Discounts Equipment: $72,100 11,690 $640 1,270 1,510 2,190 At cost 77,360 Provision for depreciation 16,840 Drawings Long-term Loan Motor Expenses Premises: 10,740 20,000 16,740 At cost 60,000 Provision for depreciation 10,000 Purchases and Sales Shop Expenses Inventory as at 1 January 2021 Accounts Receivables and Payables Wages Telephone and Insurance Expenses Sales and Purchases Returns 132,700 276,300 21,380 35,820 12,490 46,330 1,750 1,300 9,210 1,700 Total 420,030 420,030 You have also been given the following information: 1. Inventory as at 31 December 2021 was valued at $29,700. 2. Motor expenses paid in advance were $350. 3. Wages unpaid at year end amounted to $1,840. 4. Equipment is to be depreciated at 12.5% using the reducing balance method. 5. Premises need to be depreciated using the straight-line method at 5%. a) Prepare an income statement (formerly a trading and profit and loss account) for the year ended 31 December 2021. b) Prepare a statement of financial position (formerly a balance sheet) as at 31 December 2021.
Question 2 ABC company is a small engineering firm. The following balances have been extracted from the accounts as at 31 December 2021. DR CR Capital Bank Transportation-in Transportation-out Sales and Purchases Discounts Equipment: $72,100 11,690 $640 1,270 1,510 2,190 At cost 77,360 Provision for depreciation 16,840 Drawings Long-term Loan Motor Expenses Premises: 10,740 20,000 16,740 At cost 60,000 Provision for depreciation 10,000 Purchases and Sales Shop Expenses Inventory as at 1 January 2021 Accounts Receivables and Payables Wages Telephone and Insurance Expenses Sales and Purchases Returns 132,700 276,300 21,380 35,820 12,490 46,330 1,750 1,300 9,210 1,700 Total 420,030 420,030 You have also been given the following information: 1. Inventory as at 31 December 2021 was valued at $29,700. 2. Motor expenses paid in advance were $350. 3. Wages unpaid at year end amounted to $1,840. 4. Equipment is to be depreciated at 12.5% using the reducing balance method. 5. Premises need to be depreciated using the straight-line method at 5%. a) Prepare an income statement (formerly a trading and profit and loss account) for the year ended 31 December 2021. b) Prepare a statement of financial position (formerly a balance sheet) as at 31 December 2021.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Question 2
ABC company is a small engineering firm. The following balances have
been extracted from the accounts as at 31 December 2021.
DR
CR
Capital
Bank
Transportation-in
Transportation-out
Sales and Purchases Discounts
Equipment:
$72,100
11,690
$640
1,270
1,510
2,190
At cost
• Provision for depreciation
77,360
16.840
Drawings
Long-term Loan
Motor Expenses
Premises:
10,740
20,000
16,740
At cost
60,000
Provision for depreciation
10,000
132,700 276,300
21,380
35,820
Purchases and Sales
Shop Expenses
Inventory as at 1 January 2021
Accounts Receivables and Payables
Wages
Telephone and Insurance Expenses
Sales and Purchases Returns
9,210
12,490
46,330
1,750
1,300
1.700
Total
420,030 420,030
You have also been given the following information:
1. Inventory as at 31 December 2021 was valued at $29,700.
2. Motor expenses paid in advance were $350.
3. Wages unpaid at year end amounted to $1,840.
4. Equipment is to be depreciated at 12.5% using the reducing balance
method.
5. Premises need to be depreciated using the straight-line method at 5%.
a)
Prepare an income statement (formerly a trading and profit and loss
account) for the year ended 31 December 2021.
b)
Prepare a statement of financial position (formerly a balance sheet) as at
31 December 2021.
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