Jill Grey operates the Town Shop on premises leased for ten years from 1.1.2009 paying £200,000 for the period. The upper floors of the premises contain two flats. Jill occupies one and has let out the other at £250 per week. She has also invested cash surplus to immediate requirements of the shop in savings certificates. The year-end Trial Balance of the shop appears as shown. You are informed as follows:

(a) Inventory taken on 7 January 2013 reveals the cost of unsold goods in hand as £312,000 and unused stationery as £3,000. During the seven days after 31 December purchases amounted to £11,000, Sales (at cost plus 40%) amounted to £28,000, and stationery has been acquired for £1,000.

(b) A debt of £8,000 is to be written off and the allowance for doubtful debts adjusted to cover 10% of the amount outstanding.

(c) Salary and electricity of £18,000 and £3,000 respectively remain unpaid as at 31 December 2012.

(d) Jill estimates that a tenth of the cost of the lease may be allocated to each flat and depreciates furniture at 10% per annum, using the reducing balance method.

(e) One third of the cost of electricity and gas is to be recovered from Jill.

(f) Interest of £4,000 earned on savings certificates is yet to be accounted for.

Required: 

The Statement of income for the year ended 31 December 2012 and the Statement of financial position as at that date.

Transcribed Image Text:

Trial Balance as at 31.12.2012 Lease of shop premises Furniture at cost Depreciation to 31.12.2011 Inventory as at 31.12.2011 Sales Investments (saving certificates) Electricity and gas Rent received account Postage and telephone Purchases Receivables and payables Salaries Advertising Stationery Allowance for doubtful debts 6% Loan from Jack Grey Carriage inwards Capital account Cash and bank balance £'000 £10 120 200 248 - 45 21 - - - 24 £'000 - 30 14 987 148 267 302 44 16 1,424 - 15 11 300 200 78 2,247 2,247