SECTION Choose ONE question from this section Question 7 Ms. Peabody kept her business records in a semi basement office. The office was flooded and most of her records were destroyed. She asks you to help her calculate the profit for the accounting year ended 31 December 2018. From bits of Information she recovered and the previous year's records, she manages to provide you with the following information: Non-current assets Depreciation allowance Inventories Bank Trade receivables Trade payables Rent prepaid Interest free long term loan 1 January 2018 360,000 110,000 128,000 45,400 156,000 112,000 8,000 160,000 31 December 2018 c ? ? 186,000 ? 184,000 82,000 100,000 a) Ms. Peabody had withdrawn 2,300 monthly from the bank account, besides taking goods for her private use costing 6,800. b) During the year, a personal investment of 30,000 had matured and she had deposited this in her business bank account c) New equipment was purchased by cheque for 72,000. It is company policy to write off non- current assets over six years and the residual value is estimated at 10% of their original cost. None of the non-current assets on the books had been in use for more than five years. d) The rent contract stipulates an annual payment of 48,000 to be paid in advance every three months. The next payment is due on 1 March 2019. e) All sales and purchases were on credit. Ms. Peabody sells her goods at a 20% gross profit margin. 1) From bank records, you calculate that other running expenses paid, in addition to rent amounted to 72,400. Payments to trade payables amounted to 1,130,800. Ms. Peabody could not determine the amount of money received from sales. a) From credit notes salvaged, you deduce that returns in amounted to 22,400, and returns out to 16,800. h) Irrecoverable debts written off during the year amounted to C6,400, while a debt of 1,000 written off in the previous year was recovered. Question continues on next page Page 6 of 11 Required: 1. Prepare control accounts to calculate receipts from trade receivables and credit purchases. (6) ii. Prepare the bank account of Ms. Peabody for the year and calculate the balance as at 31st December 2018 (5) Prepare Ms. Peabody's statement of profit or loss for the period ended 31st December 2018. (10) List and explain two benefits of maintaining a full set of books. (4) iv. (Total: 25 marks)