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(vi) Rent paid, as recorded in the ledger, relates to only 9-month period. One quarter of rent payment remains owed as at 31st March 2016. Required a) Prepare a corrected Statement of Comprehensive Income for Basil Brush's business for the year ended 31st March 2016 using the Common European Format b) Prepare a corrected Statement of Financial Position for Basil Brush's business as at 31st March 2016 using the Common European Format

(vi) Rent paid, as recorded in the ledger, relates to only 9-month period. One quarter of rent payment remains owed as at 31st March 2016. Required a) Prepare a corrected Statement of Comprehensive Income for Basil Brush's business for the year ended 31st March 2016 using the Common European Format b) Prepare a corrected Statement of Financial Position for Basil Brush's business as at 31st March 2016 using the Common European Format

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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EL Question 3 Basil Brush Basil Brush is a sole proprietor who keeps a simple set of double entry accounting records. During the year ended 31st March 2016, the accounts are recorded correctly and a trial balance from the ledger balances off. Basil Brush has attempted to prepare a Statement of Comprehensive Income and a Statement of Financial Position from his ledger and they are shown below. Clearly the financial statements are not presented correctly! Statement of Comprehensive Income for the year to 31 March 2016 € Inventory, 31 March 2015 Purchases Rent paid New motor vans, purchased 1 January 2016 fully paid at cost Wages General expenses Bad debts written off Provision for doubtful debts, 31 March 2015 Capital Retained earnings as at 31 March 2015 Trade payables Bank overdraft Accumulated depreciation as at 31 March 2015: 1,500 30,000 360 Furniture & fittings Motor vans 1,200 2,240 320 420 100 €36,140 Statement of Financial Position as at 31 March 2016 € 3,000 3,778 3,080 1,870 Sales revenue Discounts allowed 102 120 €11,950 730 Less Discounts received 450 Loan from A. Fox Net loss for the year Freehold property Furniture and fittings cost as at 31 March 2015 Motor vans, cost as at 31 March 2015 Drawings Trade receivables (net of bad debts) The following additional information is available: (i) Depreciation expenses for the year should be calculated as follows: € 35,150 280 490 220 €36,140 € 5,000 1,020 600 1,400 3,350 €11,370 Furniture and fittings at 10% annual rate of depreciation (straight line method) Motor vans at 20% annual rate of depreciation (straight line method) (ii) It is discovered that a credit sale for €300 made in February 2016 has not been recorded in Basil Brush's books. (iii) (iv) (v) (vi) The doubtful debts provision at the end of the year to 31st March 2016 should represent 10% of the Trade Receivables figure. Interest on the loan from A. Fox should be charged at a rate of 10% per annum. No interest was paid in the period under review. The closing inventory as at 31st March 2016 has been valued at €2,000. Rent paid, as recorded in the ledger, relates to only 9-month period. One quarter of rent payment remains owed as at 31st March 2016. Required a) Prepare a corrected Statement of Comprehensive Income for Basil Brush's business for the year ended 31st March 2016 using the Common European Format b) Prepare a corrected Statement of Financial Position for Basil Brush's business as at 31st March 2016 using the Common European Format
Transcribed Image Text:EL Question 3 Basil Brush Basil Brush is a sole proprietor who keeps a simple set of double entry accounting records. During the year ended 31st March 2016, the accounts are recorded correctly and a trial balance from the ledger balances off. Basil Brush has attempted to prepare a Statement of Comprehensive Income and a Statement of Financial Position from his ledger and they are shown below. Clearly the financial statements are not presented correctly! Statement of Comprehensive Income for the year to 31 March 2016 € Inventory, 31 March 2015 Purchases Rent paid New motor vans, purchased 1 January 2016 fully paid at cost Wages General expenses Bad debts written off Provision for doubtful debts, 31 March 2015 Capital Retained earnings as at 31 March 2015 Trade payables Bank overdraft Accumulated depreciation as at 31 March 2015: 1,500 30,000 360 Furniture & fittings Motor vans 1,200 2,240 320 420 100 €36,140 Statement of Financial Position as at 31 March 2016 € 3,000 3,778 3,080 1,870 Sales revenue Discounts allowed 102 120 €11,950 730 Less Discounts received 450 Loan from A. Fox Net loss for the year Freehold property Furniture and fittings cost as at 31 March 2015 Motor vans, cost as at 31 March 2015 Drawings Trade receivables (net of bad debts) The following additional information is available: (i) Depreciation expenses for the year should be calculated as follows: € 35,150 280 490 220 €36,140 € 5,000 1,020 600 1,400 3,350 €11,370 Furniture and fittings at 10% annual rate of depreciation (straight line method) Motor vans at 20% annual rate of depreciation (straight line method) (ii) It is discovered that a credit sale for €300 made in February 2016 has not been recorded in Basil Brush's books. (iii) (iv) (v) (vi) The doubtful debts provision at the end of the year to 31st March 2016 should represent 10% of the Trade Receivables figure. Interest on the loan from A. Fox should be charged at a rate of 10% per annum. No interest was paid in the period under review. The closing inventory as at 31st March 2016 has been valued at €2,000. Rent paid, as recorded in the ledger, relates to only 9-month period. One quarter of rent payment remains owed as at 31st March 2016. Required a) Prepare a corrected Statement of Comprehensive Income for Basil Brush's business for the year ended 31st March 2016 using the Common European Format b) Prepare a corrected Statement of Financial Position for Basil Brush's business as at 31st March 2016 using the Common European Format
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