Below is the trial balance of Tommys Trailers at 5 April 2020 Trading account Sales 1,420,000 Opening inventory 137,000 Purchases 914,000 Carriage inwards 1,770 Other revenues and expenses Income from repair services 14,520 Rent 33,000 Insurance 4,650 Advertising expense 2,910 Heating and lighting 4,120 Shop and office expenses 36,000 Salaries and wages 49,705 Discounts allowed 3,650 Carriage outwards 3,234 Balance sheet accounts Fixtures and fittings at cost 325,000 Fixtures and fittings accumulated depreciation at 6 April 2019 60,000 Motor vehicles at cost 148,000 Motor vehicles accumulated depreciation at 6 April 2019 51,600 Receivables 71,248 Allowance for receivables (at 6 April 2019) 3,100 Bank 19,200 Payables 49,325 Loan 50,000 Capital 144,000 Drawings 39,058 1,792,545 1,792,545 The following information is relevant The closing inventory LP1 at 5 April 2020 is valued at 129,350 On 5 January 2020 Tommy sold a motor vehicle for 9,000 The customer was due to pay Tommys Trailers on 5 April 2020 but had not paid at the year end Nothing regarding the disposal transaction has been recorded in the accounts This motor vehicle had been bought on 6 April 2017 for 16,000 On 5 October 2019, Tommy bought a new motor vehicle for 22,000 on cash terms Tommy mistakenly recorded the purchase in the accounts as DR Fixtures Fittings 22,000 CR Bank 22,000 Depreciation on motor vehicles is provided at 20 per annum using the reducing balance basis on a monthly pro rata basis Depreciation on fixtures and fittings is provided at 15 per annum on the straight line basis, assuming no residual value There were no purchases or disposals of fixtures and fittings during the year Tommy estimates that 2,280 due from customers will be irrecoverable and must be written off The allowance for receivables is to be set at 5 of net receivables at 5 April 2020 Rent includes a prepayment of 780 Insurance includes a prepayment of 960 The heating bill will arrive on 5 June 2020 and about 390 is expected to relate to the period until 5 April 2020 The long term loan is repayable in 10 years time Interest payable on the loan is 7 and will be paid once per year Required a Prepare the income statement for Tommys Trailers for the period ended 5 April 2020 Show your workings, including a full non current assets note (25 marks) b Prepare the balance sheet for Tommys Trailers as at 5 April 2020 Show your workings (15 marks) c In the accrual accounting system, accountants are expected to observe a number of core principles including prudence and reliability Explain each of these two principles, using an example of a specific accounting transaction or event in each case to help your explanation Your answer should be 150 words or less (5 marks) d While Question 1 (a) and (b) is similar to what you can expect in Question 1 in the exam, there are some differences Outline these differences Briefly discuss how you would prepare for Question 1 in the exam Use 150 words or less for your whole answer to this question (5 marks)

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Below is the trial balance of Tommys Trailers at 5 April 2020. Trading account: Sales 1,420,000 Opening inventory 137,000 Purchases 914,000 Carriage inwards 1,770 Other

Below is the trial balance of Tommys Trailers at 5 April 2020.


Trading account:
Sales		1,420,000
Opening inventory	137,000
Purchases	914,000
Carriage inwards	1,770
Other revenues and expenses:
Income from repair services		14,520
Rent	33,000
Insurance	4,650
Advertising expense	2,910
Heating and lighting	4,120
Shop and office expenses	36,000
Salaries and wages	49,705
Discounts allowed	3,650
Carriage outwards	3,234
Balance sheet accounts:
Fixtures and fittings at cost	325,000
Fixtures and fittings accumulated depreciation at 6 April 2019		60,000
Motor vehicles at cost	148,000
Motor vehicles accumulated depreciation at 6 April 2019		51,600
Receivables	71,248
Allowance for receivables (at 6 April 2019)		3,100
Bank	19,200
Payables		49,325
Loan		50,000
Capital		144,000
Drawings	39,058
	1,792,545	1,792,545

The following information is relevant.

The closing inventory [LP1] at 5 April 2020 is valued at 129,350.
On 5 January 2020 Tommy sold a motor vehicle for 9,000. The customer was due to pay Tommys Trailers on 5 April 2020 but had not paid at the year-end. Nothing regarding the disposal transaction has been recorded in the accounts. This motor vehicle had been bought on 6 April 2017 for 16,000.
On 5 October 2019, Tommy bought a new motor vehicle for 22,000 on cash terms. Tommy mistakenly recorded the purchase in the accounts as DR Fixtures & Fittings 22,000 / CR Bank 22,000.
Depreciation on motor vehicles is provided at 20% per annum using the reducing balance basis on a monthly pro-rata basis. Depreciation on fixtures and fittings is provided at 15% per annum on the straight line basis, assuming no residual value. There were no purchases or disposals of fixtures and fittings during the year.
Tommy estimates that 2,280 due from customers will be irrecoverable and must be written off.
The allowance for receivables is to be set at 5% of net receivables at 5 April 2020.
Rent includes a prepayment of 780.
Insurance includes a prepayment of 960.
The heating bill will arrive on 5 June 2020 and about 390 is expected to relate to the period until 5 April 2020.
The long-term loan is repayable in 10 years time. Interest payable on the loan is 7% and will be paid once per year.

Required:

a.Prepare the income statement for Tommys Trailers for the period ended 5 April 2020. Show your workings, including a full non-current assets note.

(25 marks)

b.Prepare the balance sheet for Tommys Trailers as at 5 April 2020. Show your workings.

(15 marks)

c.In the accrual accounting system, accountants are expected to observe a number of core principles including prudence and reliability. Explain each of these two principles, using an example of a specific accounting transaction or event in each case to help your explanation. Your answer should be 150 words or less.

(5 marks)

d.While Question 1 (a) and (b) is similar to what you can expect in Question 1 in the exam, there are some differences. Outline these differences. Briefly discuss how you would prepare for Question 1 in the exam. Use 150 words or less for your whole answer to this question. (5 marks)