Can someone help me with income statement plz, the note two atually read as
2.Any prepayment or accrual is to be charged to "General Expenses".
the note two atually read as 2.Any prepayment or accrual is to be charged to "General Expenses".
Notes: Following an investigation, it is discovered that the gure presented in the trial balance as "Sales" is in fact cash receipts from credit customers, and the gure presented as "Purchases" turns out to be cash payments to credit suppliers. Following a further investigation, it is also found out that prepayments of 22,050 and accruals of 9,975 has been included in the gure presented as "General Expenses" in the trial balance. The prepayments reect an annual business insurance cover bought by Snow Fleece Ltd on 1st July 2018. The accruals reect last year's utility bill which has been settled in 2019. During the year, an insurance premium of 55,048 for the same business insurance was paid, and has been included in "General Expenses". At the end of the year, the utility bill for the nal quarter of the year has not been received. The estimated amount of utility bill payable is 44,100 annually. The depreciation policy of Snow Fleece Ltd's non-current assets is as follow: Depreciation Economic method useful life Scrap value Ofce equipment Straight line 10 years 0 Vehicles Reducing 7 years 43,238 balance No depreciation has yet been charged during the reporting pen'od. For all non-current assets, a full year's depreciation is charged in the year of acquisition and none in the year of disposal. . During the year, Snow Fleece Ltd carried out major ofce refurbishment. Some outdated office equipment which had originally cost 47,250 when rst installed on tst January 2017 were sold for 21,000. They had been replaced by new ofce equipment which costs 140,000 when bought on 1st January 2019. The costs of replacing the asset had been recorded on cash basis, but not on accrual basis. . Snow Fleece Ltd informs you that the balance of the following accounts as at 31st December 2019 is: Trade receivables (31st December 2019) 273,775 Trade payables (31st December 2019) 777,735 Inventories (31 st December 2019) 85,365 . A client who owes 37,275 has gone into liquidation, and it is anticipated that the total debt will be irrecoverable. Another client who owes 4,830 has gone into administration, and it is doubtful that this client can repay its debt. Both gures are still included in the closing trade receivables balance (31 st December 2019). . To anticipate future bad debts, Snow Fleece Ltd has decided to set up a general provision for bad and doubtful debts, amounting to 2.5% of the trade receivables balance. The general provision for bad and doubtful debts appties to trade receivables balance of clients with unknown nancial difculty. 9. The interest rate of the long-term loan is 3-25%- The loan interest has not been recorded and remain unpaid as at 31 st December 2019. 10. Snow Fleece Ltd's business bank account represents the only form of liquid assets of the company. All expenses are paid out directly from the business bank account. Required (a) Prepare the Statement of Comprehensive Income for the year ended 31\"1 December 2019 for Snow Fleece Limited. (10 marks) (b) Prepare the Statement of Cash Flows for the year ended 31\"1 December 2019 for Snow Fleece Limited. You should use the direct method for calculating the net cash flow from operating activities. (5 marks) (c) Prepare the Statement of Financial Position as at 319' December 2019 for Snow Fleece Limited. (10 marks) Please show all necessary workings. including the double-entries for any adjustment made in a general ledger (T-account) or journal entry format. Note(s) Deb'rt Credit Sales 1 1 1 254,965 Purchases 1 10,106,265 Vehicle expenses 10 169,575 General expenses 2, 3, 10 422,625 Wage expenses 10 437,500 Ofce equipment 4, 5 Cost 787,500 Accumulated depreciation (beginning of the year) 315,000 Vehicles 4 Cost 882,000 Accumulated depreciation (beginning of the year) 509,355 Proceeds from the disposal of ofce equipment 5 21,000 Purchase of ofce equipment (at 1st January 2019) 5 140,000 Inventories (beginning of the year) 6 78,750 Trade receivables (beginning of the year) 6, 7, 8 253,050 Trade payables (beginning of the year) 6 761,250 Long term loan (beginning of the year) 9 100,000 Cash and cash equivalents (beginning of the year) 230,790 Equity capital (beginning of the year) 300,000 Retained earnings (beginning of the year) 246,485 13,508,055 13,508,055
