Bill Smithson runs a second-hand furniture business from a shop which he rents. He does not keep

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Bill Smithson runs a second-hand furniture business from a shop which he rents. He does not keep complete accounting records, but is able to provide you with the following information about his financial position at 1 April 2011: Inventory of furniture £3,210; Trade accounts receivable £2,643; Trade accounts payable £1,598; Motor vehicle £5,100; Shop fittings £4,200; Motor vehicle expenses owing £432. He has also provided the following summary of his bank account for the year ended 31 March 2012:

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All cash and cheques received were paid into the bank account immediately. You find that the following must also be taken into account: l Depreciation is to be written-off the motor vehicle at 20% and off the shop fittings at 10%, calculated on the book values at 1 April 2011 plus additions during the year. l At 31 March 2012 motor vehicle expenses owing were £291 and insurance paid in advance was £177. l Included in the amount paid for shop fittings were: a table bought for £300, which Smithson resold during the year at cost, some wooden shelving (cost £250), which Smithson used in building an extension to his house. Other balances at 31 March 2012 were:

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Required:

(a) For the year ended 31 March 2012 (i) calculate Smithson’s sales and purchases, (ii) prepare his income statement.

(b) Prepare Smithson’s statement of financial position as at 31 March 2012.

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Frank Woods Business Accounting

ISBN: 9780273759287

12th Edition

Authors: Frank Wood. Sangster, Alan

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