Accounting

QUESTION 1 Mariana prepares her financial statements to 31 December every year. At 31 December, 2019. trial balance was as follows: DR CR GHS 000 GHS '000 Capital 55,720 Sales 65,880 Purchases 50,356 Inventory 1/1/2019 7.900 Returns 545 1,720 Printing and Stationery 1,692 Rent 2.400 Discounts 1.800 3,520 Transport and travelling 1.760 Repairs and maintenance 1.523 Allowance for receivables 650 Land at cost 13.500 Building at cost 45.000 Accumulated depreciation on building 6,100 Motor Vehicle at cost 24.500 Accumulated depreciation on motor vehicles 9,600 Equipment and Furniture 12.450 Accumulated depreciation on equipment & furniture 4,980 Trade receivables 9.450 Cash at hand 9.524 Cash at bank 5,950 Drawings 4.520 Interest on loan 2.200 Trade payables 13,000 20% Loan 22.000 189.120 189.120 The following additional information is relevant: 1) Depreciation is to be provided as follows: Building - 5% per year on cost Motor Vehicle - 15% per year on reducing balance basis. Equipment & Furniture -10% per year on reducing balance basis. ii) Inventory value at 31 December 2019 amounted to GHS 5.840,000 iii) Rent recorded in the trial balance represents 16 months' rent paid to 30 April 2020 iv) A provision of 6% of trade receivable is to be made v) Rate paid during the year of GH4750,000 was omitted from the books, vi) Adverting cost of GH1,250,000 received in November 2019 remained outstanding at the end of the year. vii) The loan was contracted on 30th June 2019 to expand the operations of the business entity. 1 You are required to prepare: a) Income Statement for the year ended 31" December 2019 b) Statement of financial position as at 31 December 2019 (12 marks) (8 marks) (Total 20 marks)