Question 1 Eric and Sons are a shoe retail outlet. Their unadjusted statements for 2021 are as follows: Income statement 31 December 2021 Sales 990000 Cost of goods sold 613000 Gross profit 377000 Rent 102000 Salaries 74000 Sales and distribution 67500 Administration 80600 324100 Net profit 52900 Statement of financial position 31 December 2021 Non-current assets Cost Building 485000 Motor vehicles 216000 Current assets Inventory 64600 Trade receivables 76800 Bank 18100 Total assets Equity and liabilities Capital 419000 Profit for the year 52900 Non-current liabilities Loan (5%) 139200 Current liabilities Trade payables 79000 Total equity and liabilities Acc Dep NBV 116400 368600 54000 162000 530600 159500 690100 471900 139200 79000 690100 The following additional information is yet to be accounted for: 1. The building is to be depreciated at 6% per annum (straight line basis). 2. Motor vehicles are to be depreciated at 25% per annum (reducing balance basis). 3. Staff salaries of 4300 for December have not yet been accounted for. 4. A lump sum of 15200 was paid off the loan from the owner's personal funds in July. 5. Interest on the loan following the repayment was paid, but has not yet been recorded. 6. An invoice for unpaid administration expenses for 1860 was received in January for December. 7. The quarterly rent payment of 21000 was made in November. 8. A customer went out of business in December owing 1800. This amount will not be repaid. 9. Additional cash sales were made at the end of December. These amounted to 25000. Costs have already been accounted for. 10. A provision of doubtful debts of 2% needs to be made. Required: Use the information above to make the required adjustments to the accounts for Eric and Sons. Where calculations are necessary, clearly show your workings. a) Using the figures calculated above, prepare the income statement for the year ended 31 December 2021 for Eric and Sons. (15 marks) b) Using the figures calculated above, prepare the statement of financial position as at 31 December 2021 for Eric and Sons. (25 marks) Question 1 Eric and Sons are a shoe retail outlet. Their unadjusted statements for 2021 are as follows: Income statement 31 December 2021 Sales 990000 Cost of goods sold 613000 Gross profit 377000 Rent 102000 Salaries 74000 Sales and distribution 67500 Administration 80600 324100 Net profit 52900 Statement of financial position 31 December 2021 Non-current assets Cost Building 485000 Motor vehicles 216000 Current assets Inventory 64600 Trade receivables 76800 Bank 18100 Total assets Equity and liabilities Capital 419000 Profit for the year 52900 Non-current liabilities Loan (5%) 139200 Current liabilities Trade payables 79000 Total equity and liabilities Acc Dep NBV 116400 368600 54000 162000 530600 159500 690100 471900 139200 79000 690100 The following additional information is yet to be accounted for: 1. The building is to be depreciated at 6% per annum (straight line basis). 2. Motor vehicles are to be depreciated at 25% per annum (reducing balance basis). 3. Staff salaries of 4300 for December have not yet been accounted for. 4. A lump sum of 15200 was paid off the loan from the owner's personal funds in July. 5. Interest on the loan following the repayment was paid, but has not yet been recorded. 6. An invoice for unpaid administration expenses for 1860 was received in January for December. 7. The quarterly rent payment of 21000 was made in November. 8. A customer went out of business in December owing 1800. This amount will not be repaid. 9. Additional cash sales were made at the end of December. These amounted to 25000. Costs have already been accounted for. 10. A provision of doubtful debts of 2% needs to be made. Required: Use the information above to make the required adjustments to the accounts for Eric and Sons. Where calculations are necessary, clearly show your workings. a) Using the figures calculated above, prepare the income statement for the year ended 31 December 2021 for Eric and Sons. (15 marks) b) Using the figures calculated above, prepare the statement of financial position as at 31 December 2021 for Eric and Sons. (25 marks)
