Chrys Lunt, a trader in business for several years, has extracted the year-end Trial Balance from his books of account as shown on the right. He informs you as follows:

(i) Goods costing £72,400 remain unsold at the year-end.

(ii) Salaries amounting to £13,160 and rent of £6,000 remain unpaid on 31 December 2010.

(iii) A trade debt of £4,400 should be written off and an allowance for doubtful debts set up at 5% of debts remaining.

(iv) Depreciation should be written off motor vehicles and furniture at 20% and 5% per annum respectively, using the straight-line method.

Required:

Prepare the Statement of income for the year ended 31 December 2010 and set out the Statement of financial position as at that date.

Transcribed Image Text:

Trial Balance as at 31 December 2010 Motor vehicle at cost Furniture at cost Accumulated depreciation: Motor vehicles Furniture Inventory - 31 Dec 2009 Purchases Sales Returns inwards Trade receivables Trade payables Salaries Rent Other expenses Capital account Cash and bank £ 150,000 48,000 - 52,500 326,850 - 7,250 64,800 - 48,540 18,000 22,680 - 3 80,000 16,800 - 532,750 34,250 80,000 5,180 743,800 743,800