ANSWER BOTH QUESTIONS Question 1. Mr. and Mrs. Shine run a small private company selling children toys from China Mr. Shine has asked you to prepare set of financial statement for the year ended 31 December 2020 as soon as possible as the previous accountant left the company at very short notice. Dr Cr Audit and Accountancy Advertising 500 900 Bank 1,500 8,900 7,400 41,350 5,500 2,800 1,700 80,000 16,000 Creditors Long Term Bank Loan Debtors Directors remuneration Electricity Insurance Fixtures and Fittings At Cost Accumulated depreciation (at 1.1.2020) Motor Vehicle At Cost Accumulated depreciation (at 1.1.2020) Office expenses Ordinary 1 shares (issued and fully paid) Proft and loss account (at 1.1.2020) Purchases Rent and rates Sales Stock (at 1.1.2020) Wages and salaries Bank Interest 10,000 1,350 5,300 65,000 13, 200 144,000 7.500 219,000 14.000 15,000 800 330,850 330,850 Additional Information: 1. Stock at 31st December 2020 valued at cost amounted to 20,000 2. Depreciation is to be provided on fixtures and fittings at 25% on cost 10% on reducing balance method for motor vehicle. 3. Provision is to be made for Rent and Rates for 250 4. Insurance paid in advance at 31 December 2020 amounted to 700 Required 1. Prepare Income statement for the year ended 31st December2020 2. Prepare Balance Sheet as at 31st December2020 3. Discuss the six accounting concepts, underlying the preparation of financial Statements