The only accounting entries made in respect of £73,000 received on 1 January 2011 as proceeds on disposal of boardroom furniture were posting of that amount to the Disposal account. The furniture disposed of had been acquired for £160,000 on 1 July 2008. The year-end Trial Balance of the business has been extracted from the books as shown below.

You are informed as follows:

(a) Goods invoiced to customers for £64,000 have been wrongly accounted for as sale though the customers retain the option to return these goods until a week after the year-end. These goods have been invoiced at cost plus a third.

(b) Brand names acquired on 1 April 2008 are being amortised on the sum of the years’ digits method, assuming a useful life of five years.

(c) A new vehicle was acquired for £60,000 on 1 December 2010; while furniture acquired for £40,000 when the business commenced on 1 April 2000 continues to remain in use.

(d) Buildings and furniture are both depreciated on the straight-line method at 2% and 10% per annum respectively; while vehicles are depreciated at 25% per annum on the reducing balance method.

(e) Advertising expenses include £38,000 paid to an advertising agency for a campaign which would commence only from 1 April 2011, while administrative expenses amounting to £42,000 remain unpaid at the year-end.

Required: 

Prepare the financial statements of this business for the year ended 31 March 2011.

Transcribed Image Text:

Trial Balance as at 31 March 2011 Land at cost Buildings at cost Furniture at cost Motor vehicles at cost Brand names at wdv Accumulated depreciation up to 31.3.2010 Buildings Furniture Motor vehicles Vehicle running expenses Inventory as at 31.3.2011 Cash in hand Cost of goods sold Business rates Sales Administrative expenses Receivable and payable Allowance for doubtful debt Bank overdraft Advertising expenses £'000 £'000 500 1,200 480 400 120 27 544 19 4,888 92 528 372 - 148 - I 168 106 180 I I I 6,545 - 676 16 54 -