Prepare an income statement and a balance sheet

Assignment Help Financial Accounting

Reference no: EM13182302

Brown's Grocery Store
Trial Balance as at 30 September 2012	Dr	Cr
	£'000	£'000
Acc Depreciation of Building		80
Acc. Depreciation of Equipment		80
Bank Loan		300
Building	390
Capital		286
Carriage inwards	34
Cash at bank		225
Discounts allowed	12
Discounts received		21
Drawings	50
Equipment	260
General expenses	63
Heat and Light	121
Insurance	50
Payables		60
Purchases	300
Receivables	110
Returns inwards	45
Returns outwards		25
Sales		576
Inventory at 1 October 2011	100
Wages	120
	1655	1653

Question 1:

Adjustments
1. The building cost includes land valued at £150,000
2. Depreciation is to be provided at 25% reducing balance on equipment and 2% straight line on buildings
3. The owner took goods, for his own use, from inventory that cost £15000 - no adjustment has been made
4. Insurance includes £8000 for the year to 31 March 2012
5. An accrual for heat and light for September 2012 is needed
6. Bank loan interest at 4% is to be provided for
7. Inventory at 30 September 2012 is valued at cost at £120,000
8. A bad debt of £5000 is to be written off and a provision set up for 2% of the remaining receivables
9. The owner sold some equipment at the end of the year for £22,000 he has recorded the cash received but
nothing else. The equipment originally cost £50,000 4 years ago.
10. An invoice for a customer for £10,000 as been correctly recorded in sales but credited to payables.

You are required to :

(a) Set up a suspense account and explain its uses

(b) Record journal entries for all of the above adjustments and show that the suspense account is cleared

Question 2

(a) On 1 January 2012 trade receivables were £15070 and on 31 December they were £40130. If £249800 has been received in the year from customers what is the value of credit sales for the year.

(b) On 1 January 2012 trade receivables were £15070 and on 31 December they were £40130. If £249800 has been received in the year from customers after returns of £7500 and discounts allowed of £8500 what is the value of credit sales for the year.

(c) A business achieves a constant mark-up of 25%. If Sales are £480000 and inventory has risen by £6000 what were the purchases for the period.

(d) A business achieves a constant margin of 25%. If Purchases were £480000 and Sales £560000 what has happened to inventory during the period?

(e) Grace runs a clothing store. On 1 July 2012 her inventory at cost was £8200 and she owed her suppliers £7400. In the 6 months to 31 December her sales (all for cash)were £70,000 and she applies a constant mark up of 40%. On 31 December there was a fire and all of the inventory was destroyed. Grace has paid £42000 to her suppliers since 1 July and owed a further £9000. What was the value of the stock destroyed by the fire.

(f) In the last question how would the destroyed stock be accounted for? Give answers for with and without insurance.

Reference no: EM13182302

Questions Cloud

The descriptive study : The descriptive study, A causal research design is typically concerned with, The recommended minimum time spent in test market.

Would it matter if the bank simply refused to fill positions : Gorton is HIV positive. He is also has severe allergies. The medication he takes to control the debilitating effects of his allergies causes his nasal membranes to dry out, resulting in frequent nosebleeds. Even though his allergy medications cont..

Define the enthalpy of the reaction : The equilibrium constant for a reaction at 800K is 14.2. If the enthalpy of the reaction is 30 kj/mole, what would be the equilibruim constant

Mindless-conqueror or something else all together : Why was Alexander the great such an important figure in the ancient world? Was he a "mindless" conqueror, or something else all together? Please explain in detail.

Prepare an income statement and a balance sheet : Record journal entries for all of the above adjustments and show that the suspense account is cleared and prepare an income statement and a balance sheet

Is inflation good news or bad news for you : ) If the government imposes a maximum price in a market that is below the equilibrium price: _____ A) total surplus in the market decreases. B) total surplus in the market does not change. C) total surplus in the market increases. D) total surplus..

State equilibrium expression for the solubility product : A 300.0-mL saturated solution of gold (II) phosphate, contains 0.31 grams of dissolved salt. a. Write an equilibrium expression for the solubility product constant.

Characteristics of legal systems, in complex societies : What are the characteristics of legal systems, in complex societies? What is the relationship between law and societal complexity? What accounted for differences in law between the American colonies? What accounted for differences between law in the ..

Explain electrolytic cell of the molten salts- nacl : How to write half reactions what would occur if you made an electrolytic cell of the molten salts: NaCl,

User Account

All Pages