101 Machinery 50,000 102 Delivery Van 18,000 103 Computer equipment 3,000 104 Accumulated depreciation: Machinery (2,200) 105 Accumulated depreciation: Delivery van (1,800) 106 Accumulated depreciation: Computer equipment (375) 201 Cash at Bank 48,000 202 Debtors 19,850 203 Provision for doubtful debts (1,000) 204 Closing stock (SOFP) 20,500 301 Creditors (40,000) 401 Loan (40,000) 501 Capital (42,000) 502 Retained losses 60,000 601 Sales (210,000) 602 Returns Inward 300 603 Interest income (350) 701 Purchases 50,000 703 Opening Stock 10,000 704 Closing stock (IS) (20,500) 801 Water and electricity 3,400 802 Wages 55,000 803 Repairs & Maintenance 1,500 804 Marketing expenses 350 805 Loan Interest expense 800 806 Traveling Expenses 2,000 807 Insurance 600 808 Fuel costs 1,000 809 Workshop rent 12,925 810 Provision for doubtful debts expense 1,000 - Adjustments still to be accounted for: 1 The Company is expecting to receive an invoice in January 2022 of 1,000 for some clay that they have ordered. The order was confirmed by the supplier, however, the Company hasn't yet accrued for this purchase as yet. 2 One of the debtors has gone bankrupt and has informed the Company that the balance owed to him of 3,000 will not be paid. 3 The Company is expecting that 2% of their debtors are likely not to pay their outstanding amounts. 4 The Company has prepaid a licence of their computer software costing 800 covering the months January 2022 to December 2022. This still needs to be recorded within the cash account. 5 The Company still needs to account for depreciation for the year as follows: a. Machinery - using the straight-line method, scrap value of 6,000, useful life of 20 years. b. Delivery van - 10% per year using the reducing balance method c. Computer equipment - using the straight-line method, nil scrap value, useful life of 8 years.

Pass requirements P3 Prepare the income statement and the balance sheet from the given trial balance for the year ended 31 December 2021. (If you're attempting to work out M3, then prepare only one set of financial statements as per M4 below). P4 Calculate the following financial ratios by using the prepared financial statements: a. Quick ratio b. Accounts receivable days ratio c. Net profit percentage Merit requirements M3 Account for the accounting adjustments above (1-6) and show the double entries or workings. M4 Prepare the income statement and statement of financial position, also including the accounting adjustment worked in M3. D2 Distinction requirements Discuss the organisations performance over time and provide recommendations to the organisation. Make also reference to the financial ratios that were calculated and certain accounting ratio standard benchmarks that are used. The data for the previous financial year ending 31 December 2020 is provided as per below: Prior year information on ratios 31-Dec-20 Current assets 45,000 Inventory (at period end) 18,000 Current liabilities 50,000 Closing trade receivables 15,000 Sales 100,000 Retained losses 60,000 Quick ratio 0.54 Accounts receivable days ratio (in days) 54.75 Net loss percentage -60.00%