Question
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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