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Below is the trial balance of Toms Tents at 5 April 2018. Trading account: Sales 1,125,000 Opening inventory at 6 April 2017 150,000

Below is the trial balance of Tom’s Tents at 5 April 2018.

 

£

£

Trading account:

  

Sales

 

1,125,000

Opening inventory at 6 April 2017

150,000

 

Purchases

590,000

 

Carriage inwards

1,250

 

Other revenues and expenses:

  

Income from repair services

 

2,250

Rent

28,000

 

Insurance

7,500

 

Advertising expense

6,400

 

Heating and lighting

5,900

 

Shop and office expenses

44,000

 

Salaries and wages

65,500

 

Discounts allowed

3,500

 

Carriage outwards

3,200

 

Balance sheet accounts:

  

Fixtures and fittings at cost

140,000

 

Fixtures and fittings - accumulated depreciation 6th April 2017

 

28,000

Motor vehicles at cost

100,000

 

Motor vehicles - accumulated depreciation 6th April 2017

 

50,000

Receivables

85,500

 

Allowance for receivables 6th April 2017

 

4,000

Bank

51,000

 

Payables

 

32,500

Loan

 

20,000

Capital

 

100,000

Drawings

80,000

 

 

1,361,750

1,361,750

The following information is relevant.

1.     The closing inventory at 5 April 2018 is valued at £143,000.

2.     On 5 January 2018 Tom sold a motor vehicle for £12,000. The customer was due to pay Tom’s Tents on 5 April 2018 but had not paid at the year end. This disposal has not been recorded in the accounts. This motor vehicle had been bought on 6 April 2015 for £25,000.

3.     On 6 January 2018, Tom bought a new motor vehicle on credit for £30,000. At the year-end Tom had still not paid for this motor vehicle and the transaction had not been recorded in the accounts.

4.     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 10% per annum on the straight line basis, assuming no residual value. There were no purchases or disposals of fixtures and fittings during the year.

5.     Tom estimates that £6,000 due from customers will be irrecoverable and must be written off.

6.     The allowance for receivables is to be set at 5% of net receivables at 5 April 2018.

7.     Rent includes a prepayment of £2,000.

8.     Insurance includes a prepayment of £700.

9.     The heating bill will arrive on 5 May 2018 and about £500 is expected to relate to the period until 5 April 2018.

10.  The long-term loan is repayable in 5 years’ time. Interest payable on the loan is 6% and will be paid once per year.


Required:

a. Prepare the income statement for Tom’s Tents for the period ended 5 April 2018. Show your workings, including a full non-current assets note

 b. Prepare the balance sheet for Tom’s Tents as at 5 April 2018. Show your workings.

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