Prepare the profit and loss account and balance sheet, Financial Accounting

MarmadukeMuffett once had a girlfriend who ran an antiques business in London'sKings Road. Ever since then, he has been hooked on the furniture trade and now runsMarmaduke'sMarvellous Mart, a furniture emporium in Riming-on-Sea specialising inantique and 'feature' furniture especially appealing to the tourists who frequent the resortin the summer months. He buys considerable stock from his cousin Albert's 'Spiderman'workshop - and indeed has invested £70,000 in Albert's company this year.

His bookkeeper has written up the books, extracted the trial balance and sent it togetherwith the additional information to George King FCCA, the accountant who acts forMarmaduke (as well as his cousin Albert) with a request to draw up the accounts quicklysince Marmaduke has made an appointment next week to see Roy Scot, his bankmanager, to review the overdraft limit.him out by preparing Marmaduke's profit and loss account for the year ended February28, 19X8 and his balance sheet on that day. George warns you that occasionallyMarmaduke's bookkeeper gets the trial balance a bit mixed up and to be careful aboutchecking it out.

George is, as usual, rushed off his feet, together with all his staff, and asks you to help

MARMADUKE'S MARVELLOUS MART: TRIAL BALANCE

at February 28, 19X8




Assets and
Expenses

Liabilities, Capital
and Income


£

£

Trade debtors

16,000


Trade creditors


18,000

Purchases

65,000


Invoiced sales


174,000

Opening stock at 1/3/X7


21,000

Loans from directors - repayable 28/2/Y3

27,000


Bank overdraft

28,000


Equipment and furnishings (cost)

25,000


Premises (cost)

100,000


Accumulated depn on equipment at 1/3/X7


15,000

Motor vehicles (cost)


34,000

Accumulated depn on vehicles at 1/3/X7

14,000


Share capital

70,000


Investment in Albert Muffett Limited


70,000

Directors' salaries

20,000


Shop salaries


12,000

Administration expense

6,000


Promotion expense

21,000


Interest paid to bank


2,000

Profit and loss account 1/3/X7


46,000

£ 392,000


£392,000

Additional information

  • Stock on hand at February 28, 19X8 is valued at cost £28,000.
  • Depreciation on equipment for 19X8 is calculated at 20% on cost per annum.
  • Depreciation on motor vehicles is calculated at 25% of net book value (cost less depreciation) per annum.
  • Accruals for administration expense - telephone, stationery and electricity - are estimated at £2,000.
  • Administration expense includes £1,500 for insurance paid a year in advance on November 1, 19X7.
  • Provide for tax at 25% of net profit.
  • Provide a final dividend of £5,000.

You are required to:

a.   list the adjustments needed to correct the trial balance.

b.   prepare the profit and loss account and balance sheet in appropriate format for publication

Posted Date: 3/6/2013 5:57:00 AM | Location : United States







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