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Debit Credit $ $ Purchases and sales 1,250,500 2,870,000 Capital 450,000 Inventory at January 1, 2020 235,000 Returns 42,200 22,500 Wages 340,500 Rent 80,000 Rates

Debit

Credit

$

$

Purchases and sales

1,250,500

2,870,000

Capital

450,000

Inventory at January 1, 2020

235,000

Returns

42,200

22,500

Wages

340,500

Rent

80,000

Rates

15,500

Motor vehicle

800,000

Provision for depreciation motor vehicle

120,000

Equipment

950,000

Provision for depreciation equipment

95,000

Fixtures & fittings

150,000

Provision for depreciation fixtures & fittings

5,000

Drawings

8,000

Long-term loan

600,000

Trade receivables & payables

35,000

94,000

Provision for bad debts

1,500

Commission received

6,000

Carriage outwards

12,000

Carriage inwards

2,500

Rent received (from G. Lascelles)

30,000

Bank

347,300

Cash

25,500

4,294,000

4,294,000

Additional information:

a) Inventory as at December 31, 2020 was $35,300

b) Depreciate Equipment at 10% and motor vehicle at 15% on their balances and fixtures & Fittings at 10% on the cost.

c) Wages was owed for $12,000.

d) Rates prepaid were $3,000.

e) Commission received was owed $4,000.

f) On August 1, 2020, Kenrick sublet a section of the premises to G. Lascelles at $15,000 per month.

g) The provision for bad debts is to be revised to 10 % of trade receivables.

Required:

1. Prepare the Income Statement for the year ended 31 December 2020 and, (30 Marks)

2. Prepare a Statement of Financial Position as at 31 December 2020. (20 Marks )

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