Section A You must answer BOTH questions from this section, using a separate white answer sheet for each question (all questions of equal weighting 'the weighting is noted against the question/sub question). If there is not enough space on a white sheet, please raise your hand to request a YELLOW answer sheet in order to continue your answer. QUESTION 1 (COMPULSORY) On the 1st January 2013, Cold & Sweet Ice-cream (CSI) was set up by Paul Edwards as a business importing various types of ice-cream from oversees and selling them locally in Glasgow. After his last ful year of business. Paul produced his latest set of accounts and the latest balance shee. is reproduced below: Cold & Sweet Ice-cream Balance Sheet as at 31 December 2017 Non-current assets: Freezers Varicks Current assets: Inventory Traderivables Bark TOTAL ASSETS Current liabilities: Trade payables Accruals Non-Current liabilitics Laan Equity: Owner's capital Retained profit TOTAL EQUITY AND LIABILITIES '000 1000 '000 Cost Acc. Depn. 300 ( 150) 150 200 f 50 150 300 300 100 60 460 780 150 5 155 300 260 45 305 780 Additional notes: 1. The loan was taken out on the 1st of June 2014 and was for a period of five years repayable at the end of the period with interest payable on a monthly basis at 55 per annum 3 2. The freezers have been being used since their purchase on the first day of trading, but all the vehicles were malaced on the 1 January 2017 Transactions for the year of trading to 31 December 2018 are listed below: i) 110 iv) v) The depreciation policy for the non-current assets is to charge a full year of depreciation in the year of purchase and to make no charge in the year of sale. Freezers are deprecated on a straight line basis over 10 years with no residual value. However, CSI uses 25% reducing balance method to depreciate vehicles CSI cisposed of a vehicle that had cost 40,000. CSI sold the vehicle for 25,000, which was received in cash CSI purchased a new vehicle for 45,000 paying by cash During the year. CSI spent 700,000 on the purchase of various types of ice- cream. All purchases were made on credit terms CSI raised 1,000,000 of revenue in the year from selling the opening stock of inventory (300,000) and additional inventory purchased within the year that had cost 500,000 20% of the sales were made on a cash basis, and the rest were sold on credit terms Within the first few months of the year, the opening balance of trade payables was cleared, and at the end of the year, the balance of trade payable was 30,000 vij During the year. 750,000 was collected from credit customers During the year the following cash payments were made: Wages and salaries (1 Jan 2018 to 31 Dec 2018) 24,000 bx xi) Electricity (1 Jan 2016 to 30 Sep 2018) 9.000 Rent (paid for 18 months, staring 1 Jan 20181 18,000 Accrual balance as at 31 Dec 2017 related to electricity consumed in 2017 Paul withdrew 100,000 in cash from CSI Paul was informed that a credit customer who owed 4,000 went bankrupt, and it was clear at the end of the year that no cash would ever be forthcoming from this customer REQUIRED: Using the information provided, prepare the income statement and the balance sheet for CSI for the year ended 31 December 2018 (40%) NOTE: A pro-forma spreadsheet has been included for your use when preparing the spreadsheet. If you use the pre-forma spreadsheet, you MUST note your student number on any pages you submit as part of your answer. The income statement and balance sheet should be presented in the answer sheets along with all workings.