1. On 1 January 2014 Tom Sirocco, a friend of yours, commenced in business. Tom is having trouble nding the accounting process and has asked you for advice. You examine his books. During the year ended 31 December 2014 the following transactions occurred: Lodgement by Tom on 1 January 2014 of 120,000 of his savings into the business bank account. Purchase of equipment by cheque 80,000. Purchases of stock on credit 200,000. Sales on credit 370,000. Payments to creditors for stock 165,000. Payments to employees 140,000. Rent paid 45,000. Insurance paid 17,000 Payments to owner (drawings) 40,000. Cash received from debtors 310,000. Amount borrowed from bank 200,000. Loan repayments 45,000 (including interest of 16,000). Notes: (1) All money received is lodged. (2) All payments are made by cheque. (3) Closing stock was valued at 70,000. (4) Depreciation is calculated at a rate of 20% per annum on cost. Required: (a) Prepare the trading profit and loss account for the year ended 31 December 2014. (b) Prepare the ledger accounts for the bank, loan, debtors and creditors. (c) Prepare the balance sheet as at 31 December 2014. (d) Explain to Tom, in plain English, the purpose and process of accounting. (10 marks) (10 marks) (10 marks) (10 marks)