Question 2 Book-keeping

The following is an extract from the trial balance of Willow Ltd as at 31 December 2020:

	DR	CR
Revenue		600,000
Inventory valuation at 1 January 2020	24,000
Purchases	240,000
Carriage inwards	2,000
Carriage outwards	3,000
Administrative expenses	180,000
Distribution costs	75,000

Note: inventory valuation at 31 December 2020 was 30,000.

Required:

Using the information available, show the adjustment required to calculate Willow Ltds draft profit before tax.

3. You are now advised that, on 1 April 2020, Willow Ltd raised loan finance of 100,000 which will be repayable in a single instalment on 31 March 2025. Show how this transaction should be recorded in the double entry system.

[2 marks]