Understated $ No effect Overstated $ Item No effect (i) Gross profit for the year ended 31 January 2007 (ii) Net profit for the year ended 31 January 2007 (iii) Total of current assets in balance sheet at 31 January 2007 ********... [IGCSE 2007] 5. The following trial balance was extracted from the books of Amir Sadiq at 31 March 2003. $ $ 33 000 Capital 2 500 Drawings 20 000 Buildings at cost 3 400 Fixtures and equipment at valuation 8 000 Motor vehicles at cost Provision for depreciation of motor vehicles Provision for doubtful debts 7 500 Trade receivables Trade payables Bank overdraft Motor vehicle expenses 1 240 General expenses 2 030 11 940 Wages Insurance Carriage inwards 1 470 700 Discount received Revenue (sales) Purchases 68 500 Sales returns 1 200 Inventory 1 April 2002 9.900 138 380 Additional information 1 At 31 March 2003: Inventory was valued at $10 200 3 250 200 6 700 2 880 250 92 100 138 380 Wages outstanding amounted to $1080 Insurance prepaid amounted to $210. 2 During the year ended 31 March 2003 Amir took goods costing $300 for his own use. No entries had been made in the accounting records. 3 The provision for doubtful debts is to be maintained at 2% of the trade receivables. 4 Motor vehicles are to be depreciated at 20% per annum using the reducing balance method. 5 Fixtures and equipment were valued at $2800 on 31 March 2003. No fixtures and equipment were bought or sold during the year. Required (a) Prepare the income statement of Amir Sadiq for the year ended 31 March 2003. (b) Prepare the balance sheet of Amir Sadiq at 31 March 2003. (c) (i) Explain what is meant by the going concern principle. (ii) State the basis on which inventory should be valued when the going concern principle is applied. [Based on IGCSE 2003] 6. Morag MacDonald provides a range of business services for small retail organisations. Her financial year ends on 31 December. She provided the following information for the year ended 31 December 2008. $ 75 050 1 800 Fees from clients Property tax paid 2 930 Repairs and maintenance 2 750 Rent received from tenant 45 000 1790 Wages 1 680 Stationery and office supplies Insurance Additional information 1 On 31 December 2008: Fees due from clients Wages owing $ 9 000 2 000