John Hanning owns a small hotel. The following balances were taken from his books on 31 December 2016

Takings (Sales) Premises, at Cost Fixtures and Fittings at cost

Minibus Provision for depreciation, 1 January 2016: Fixtures and fittings

Minibus Stock of wine, 1 January 2016 Debtors Creditors Bank overdraft Cash in hand Wages Cleaning Purchase of food and wine Running expenses of minibus Bank interest (Dr Balance) Advertising General expenses Capital

Drawings

$

283,670.00 396,000.00 100,000.00

10,000.00

45,600.00 3,600.00 1,200.00 6,500.00 3,970.00

16,450.00 700.00 61,020.00 27,830.00 121,700.00 4,800.00 1,520.00 5,880.00 13,140.00 427,000.00 30,000.00

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Additional information:

1. Depreciation policies:

   The fixtures and fittings should be depreciated at 15% on cost. The minibus should be depreciated at 20% of the written down value.

2. $3,000 of the total for the purchase of food and wine was in respect of food used by Larsen and his family.

3. Stock of wine at 31 December 2016 was $1,340.

4. Bank interest of $280 had accrued at 31 December 2016.

5. Advertising, costing $900, had been paid in December 2016. This was for advertising leaflets to be published in 2017.

6. Bad debts, $1,190, were to be written off.

REQUIRED

1. (a) Prepare the Income Statement for the year ended 31 December 2016.

   [20 Marks]

2. (b) Prepare the Statement of Financial Position as at 31 December 2016.

   [20 Marks]