Below is the trial balance of OpenXI.

OpenXI

Trial balance at $31$ December $2023$

Trading account:

$$

Sales $850,000$

Opening inventory $225,000$

Purchases $650,000$

Other revenue and expenses:

Equipment rental income $20,000$

Rent $40,000$

Heating and lighting $7,000$

Advertising expense $30,500$

Wages $50,500$

Motor expenses $9,500$

Discounts allowed $12,000$

Balance sheet accounts:

Motor vehicle at cost $60,000$

Motor vehicle $-$ accumulated

depreciation $15,000$

Equipment at cost $100,000$

Equipment $-$ accumulated depreciation $50,000$

Receivables $120,800$

Allowance for receivables $6,000$

Bank $29,750$

VAT liability $43,050$

Payables $101,000$

Long$-$term loan $60,000$

Capital $200,000$

Drawings $10,000$

$1,345,0501,345,050$

Question $1$

The following information is relevant for end$-$of$-$period adjustments.

$1.$ Closing inventory at $31$ December $2023$ was $200,000.$

$2.$ Depreciation on the motor vehicle is to be provided at $25\%$ per annum on

the reducing balance method.

$3.$ Depreciation on equipment is to be provided at $10\%$ per annum on the

straight$-$line basis, assuming no residual value.

$4.$ OpenXI estimates that $8,200$ due from customers will be irrecoverable and

must be written off.

$5.$ The allowance for receivables is to be set at $5\%$ of net receivables at $31$

December $2023.$

$6.$ Rent expense includes a prepayment of $1,600.$

$7.$ The heating bill will arrive in the first week of January $2023$ and about

$1,800$ is expected to relate to the period until $31$ December $2023.$

$8.$ Advertising includes a payment of $3,000$ made on $1$ December $2023$

relating to the two month period until $31$ January $2024.$

$9.$ The long$-$term loan is repayable in $10$ years$$ time. Interest payable on the

loan is $8\%$ and will be paid once per year.

Prepare the income statement for OpenXI for the period ended $31$

December $2023.$ The income statement must show all amounts in whole

pounds. Remember to clearly show all your workings?

Prepare the balance sheet for OpenXI as at $31$ December $2023.$ The

balance sheet must show all amounts in whole pounds. Remember to

clearly show all your workings?