Question 1

The following Trial Balance has been extracted from the books of Belle Limited for the year ended 30 September 2019:

DR $ CR $

Opening Inventory 391,800

Purchases 1,941,000

Return outwards 73,200

Carriage inwards 91,950

Sales 2,851,920

Return inwards 150,360

Staff salary 363,500

Insurance 16,900

Telephone expenses 24,900

Distribution Costs 31,500

Postage and Stationery 20,100

Ordinary Share Capital 806,000

Trade Payables 126,040

Bank overdraft 66,600

Land 420,000

Buildings 150,000

Fixtures and fittings 55,800

Trade Receivables 259,500

Cash in hand 6,450

3,923,760 3,923,760

Additional information:

(i) Closing Inventory as at 30 September 2019 was $435,000.

(ii) The prepaid insurance as at 31 September 2019 amounts to $900.

(iii) There is an outstanding amount of $2,100 for the telephone expenses.

(iv) Depreciation of 15% to be provided on buildings at cost.

(v) The fixtures and fittings are depreciated at 10% using straight line method.

(vi) The company provides a 5% allowance on trade receivables.

Required:

(a) Develop an Income Statement for the year ended 30 September 2019.[13 marks]

(b) Develop a Statement of Financial Position as at 30 September 2019.[12 marks]

[Total 25 marks]