QUESTIONS 1 15 Lisa is a solo trader who started her business, Delicious Food, five years ago The business produces and sols exotic food, and has always produced accounts to 31 March each year, However, having completed the accounts to 31 March 2020, Lisa decided to change the accounting date of the business to be 31 December The business' bookkeeper has produced the following trial balance for the period from 1 April 2020 to 31 December 2020. Unfortunately the trial balance produced does not balance and Lisa has asked you to help Delicious Food - Trial balance as at 31 Decomber 2020 E000 E000 Accumulated depreciation at 1 April 2020 - Land and buildings 300 - Motor vehicles 237 - Plant and machinery 580 Allowance against receivables at 1 April 2020 32 Bank 302 Bank loan (6%) 1.000 Carriage inwards 78 Carriage outwards 125 Discounts allowed Discounts received 45 Drawings 50 Insurance 80 Inventory at 1 April 2020 610 irrecoverable and impaired debts 10 Land and buildings -- Cost 4.100 Light and heat 42 Loan interest 40 Motor vehicles - Cost 690 Office expenses 54 Plant and machinery - Cost 1,300 Purchases 7,150 Returns inwards 34 Returns outwards 68 Sales 12,729 Capital at 1 April 2020 200 Trade payables 800 Trade receivables 1,499 Wages and salaries 400 16,437 16,116 Page 3 of Additional information Delicious Food sold a vehicle on 30 September 2020 for 40,000 The vehicle cost 120,000 on 1 June 2018, No ontries have been made in the books of account in respect of this disposal (The tand and buildings shown in the trial balance at cost include 1,700,000 for the land The business has decided to adopt the following depreciation policy: Buildings are depreciated on a straight line basis over 40 years. Motor vehicles are depreciated on a reducing balance basis at 40% per year Plant and machinery are depreciated at 10% per annum on a straight line basis. The estimated residual value is 140,000 The depreciation policy is to charge a full year in the year of acquisition and none in the year of disposal. (m) Insurance includes a policy for the year ended 31 May 2021 which cost E26,400 ) An accrual for one month of light and heat is needed. An invoice for a credit purchase of goods for resale for 14,000 has been debited to insurance and credited to payables. (vi) in addition to the 10,000 irrecoverable debt already written off during the year. another irrecoverable debt of 6,000 is to be written off on 31 December 2020. The allowance against receivables should be 34,000 at 31 December 2020. (vi Loan interest of 40,000 has been paid in the period but none of the loan capital has been repaid. The loan is due to be repaid over the next ten years, starting from 1 September 2021. (vin) A bank transfer from a credit customer of 294,000 has been debited to the bank account and debited to trade receivables. (ix) The closing inventory on 31 December 2020 valued at cost is 425,000 This valuation includes some items which were purchased for 75,000 but Lisa expects to sell them for no more than 50,000. Required (a) Prepare the joumal entries necessary to correct the trial balance and deal with all of the year-end adjustments. (27 marks) (b) Show the clearance of the suspense ledger account. (4 marks) (C) Prepare the statement of profit or loss for DeliciousFood for the period ended 31 December 2020 (14 marks) (d) Prepare the statement of financial position for Delicious Food as at 31 December 2020 (15 marks) Note: Ignore VAT throughout this question. Total: 60 marks Page 4 of 6