The following is the statement of financial position of WW Associates as at 31 December 2014:

During 2015, the following transactions took place:
1 The owners withdrew £23,000 of equity in cash.
2 Premises were rented at an annual rental of £20,000. During the year, rent of £25,000 was paid to the owner of the premises.
3 Rates on the premises were paid during the year for the period 1 April 2015 to 31 March 2016 and amounted to £2,000.
4 Some machinery (a non-current asset), which was bought on 1 January 2014 for £13,000, has proved to be unsatisfactory. It was part-exchanged for some new machinery on 1 January 2015 and WW Associates paid a cash amount of £6,000.
The new machinery would have cost £15,000 had the business bought it without the trade-in.

5 Wages totalling £23,800 were paid during the year. At the end of the year, the business owed £860 of wages.
6 Electricity bills for the four quarters of the year were paid totalling £2,700.
7 Inventories totalling £143,000 were bought on credit.
8 Inventories totalling £12,000 were bought for cash.
9 Sales revenue on credit totalled £211,000 (cost £127,000).
10 Cash sales revenue totalled £42,000 (cost £25,000).
11 Receipts from trade receivables totalled £198,000.
12 Payments to trade payables totalled £156,000.
13 Van running expenses paid totalled £17,500.
The business uses the reducing-balance method of depreciation for non-current assets at the rate of 30 per cent each year.
Required:
Prepare an income statement for the year ended 31 December 2015 and a statement of financial position as at that date.

Transcribed Image Text:

Statement of financial position as at 31 December 2014 ASSETS Non-current assets Machinery 25,300 Current assets Inventories 12,200 Trade receivables 21,300 Prepaid expenses (rates) 400 Cash 8,300 42,200 Total assets 67,500 EQUITY AND LIABILITIES Equity Original 25,000 Retained earnings 23,900 48,900 Current liabilities Trade payables 16,900 Accrued expenses (wages) 1,700 18,600 Total equity and liabilities 67,500