Symmetry is a limited liability company. Financial statements need to be produced for the year ended 31 December 20X1. An initial trial balance is presented below:

Dr Cr

$ $

Revenue 405,000

Purchases 140,000

Administrative expenses 105,000

Distribution expenses 55,000

Plant and machinery cost 120,000

Plant and machinery accumulated depreciation at

1 January 20X1 35,000

Trade receivables 30,500

Allowance for receivables 1 January 20X1 3,000

Inventory 1 January 20X1 16,000

Share capital 3,000

Trade payables 24,000

Retained earnings 1 January 20X1 7,000

6% Loan 100,000

Cash 110,500

504 KAPLAN PUBLISHING

chapter 23

The following notes are relevant to the preparation of the financial statements for the year ended 31 December 20X1:

The current year tax bill has been estimated at $5,000.

Trade receivables include $2,000 which is now considered irrecoverable. The allowance for receivables needs to be increased to $5,000.

The cost of inventory as at 31 December 20X1 is $14,000. This includes a damaged item which cost $100. It can be sold for $130 if repaired. These repairs will cost $40.

No interest has been accrued on the loan, which was taken out on 1 July 20X1.

Plant and machinery is depreciated on a reducing balance basis at a rate of 10%. Depreciation is charged to cost of sales.