The year-end Trial Balance of Barlow Garments is set out. You are informed as follows:

(a) All expenses in the year have been paid in full.

(b) Goods costing £54,000 issued free for sales promotion, and others costing £12,000 taken by Mr Barlow for personal use, have not been accounted for.

(c) On the basis of a physical inventory conducted on 31 December 2010 the cost of unsold goods has been identified as £592,000.

(d) Ignore depreciation.

Required:

(a) Make the accounting entries necessary for finding the cost of goods sold and then extract another Trial Balance at that point.

(b) Proceed to identify the gross profit and at that point extract another Trial Balance.

(c) Prepare a Statement of income for the year ended 31 December 2010, starting with gross profit, and a Statement of financial position as at that date.

(d) When not identified with a date next to it, how would you know whether inventory stated in a Trial Balance is opening inventory or closing inventory?

Transcribed Image Text:

Trial Balance as at 31 December £'000 Non-current assets Inventory - 31.12.2009 Purchases Sales Drawings Carriage inwards Salaries and wages Rent Returns inwards Returns outwards Trade receivables Trade payables Other expenses Cash and bank Capital 910 412 3,248 - 148 112 288 150 125 - 495 165 14 - 6,067 2010 £'000 - 4,845 I I I 96 326 I 800 6,067