Hi, is anyone able to edit and balance this statement of financial position and income statement. Many thanks
Business Accounting (M20431) You have recently joined a renowned accountancy firm as a management consultant. Laura, a sole trader, is a new client who receives various accounting and consultancy services from your firm. The manager of the firm asked you to prepare a report for Laura addressing the following issues: a) She had a successful first year of trading and has produced the following draft Statement of Financial Position and Income Statement for the year ending and as at 31/12/2020. She doesn't have accounting knowledge and asked your firm to take a look at it and finalise it after making any necessary adjustments: Statement of Financial Position (Draft) Non-current assets Cost 140.000 Machinery (Note 1) Current assets Inventories Trade receivables (Note 2) Cash Total assets 15.500 35,500 40,300 91300 231,300 CAPITAL AND LIABILITIES Capital invested on 01/01/2020 132.300 Current liabilities Trade payables Total equity and liabilities 35.690 167,990 Income Statement (Draft) 300.000 Revenue (Note 2) Cost of sales Opening inventory Purchases (Note 2) Closing inventory Gross Profit 0 135.000 -15.500 119.500 180.500 Expenses Computers Note 3 Insurance Salary and wages Electricity (Note 4) Rent Drawings Net Profit 22.000 3.400 80.000 4.200 23.400 24.000 [157.000 23.500 She added the following notes for your information: 1. Machines will be used evenly over a 10 year period with nil residual value. I have checked the condition of the machines and they are still new and covered by the warranty so therefore they have been reported at their original cost 2 Total sales for the year was 335,500. However, some customers owed me 35,500 as at 31/12/2020 and therefore, I have subtracted this amount from the sales revenue. Similarly, I owe 35,690 to my suppliers and the purchase figure in the Income Statement was adjusted accordingly. 3 Computers are going to be used evenly over a five year period after which they will be sold for 2,000. However, I have made enough profit this year and can afford to expense the entire amount this year. In total, I paid 4,200 for electricity during the year which covers the expense 11 months to November. The bill for December is estimated to be 2,500 but I did not include it as it will be paid for in January 2021 5. Monthly rent of the warehouse I use is 1 800. The amount in the Income Statement represents the total amount paid during the year. Required: : In your report, adjust the draft Statement of Financial Position and the Income Statement [22 marks] ) Laura does not want to repeat the mistakes she made. Explain to Laura why you have made the adjustments to the draft figures, including references where necessary to support your claim. (13 marks] Business Accounting (M20431) You have recently joined a renowned accountancy firm as a management consultant. Laura, a sole trader, is a new client who receives various accounting and consultancy services from your firm. The manager of the firm asked you to prepare a report for Laura addressing the following issues: a) She had a successful first year of trading and has produced the following draft Statement of Financial Position and Income Statement for the year ending and as at 31/12/2020. She doesn't have accounting knowledge and asked your firm to take a look at it and finalise it after making any necessary adjustments: Statement of Financial Position (Draft) Non-current assets Cost 140.000 Machinery (Note 1) Current assets Inventories Trade receivables (Note 2) Cash Total assets 15.500 35,500 40,300 91300 231,300 CAPITAL AND LIABILITIES Capital invested on 01/01/2020 132.300 Current liabilities Trade payables Total equity and liabilities 35.690 167,990 Income Statement (Draft) 300.000 Revenue (Note 2) Cost of sales Opening inventory Purchases (Note 2) Closing inventory Gross Profit 0 135.000 -15.500 119.500 180.500 Expenses Computers Note 3 Insurance Salary and wages Electricity (Note 4) Rent Drawings Net Profit 22.000 3.400 80.000 4.200 23.400 24.000 [157.000 23.500 She added the following notes for your information: 1. Machines will be used evenly over a 10 year period with nil residual value. I have checked the condition of the machines and they are still new and covered by the warranty so therefore they have been reported at their original cost 2 Total sales for the year was 335,500. However, some customers owed me 35,500 as at 31/12/2020 and therefore, I have subtracted this amount from the sales revenue. Similarly, I owe 35,690 to my suppliers and the purchase figure in the Income Statement was adjusted accordingly. 3 Computers are going to be used evenly over a five year period after which they will be sold for 2,000. However, I have made enough profit this year and can afford to expense the entire amount this year. In total, I paid 4,200 for electricity during the year which covers the expense 11 months to November. The bill for December is estimated to be 2,500 but I did not include it as it will be paid for in January 2021 5. Monthly rent of the warehouse I use is 1 800. The amount in the Income Statement represents the total amount paid during the year. Required: : In your report, adjust the draft Statement of Financial Position and the Income Statement [22 marks] ) Laura does not want to repeat the mistakes she made. Explain to Laura why you have made the adjustments to the draft figures, including references where necessary to support your claim. (13 marks]
