Reference no: EM132560058
The trial balance of Lyons Brooke Bond at 31 May 2018 is as follows: Trial balance of Lyons Brook Bond at 31 May 2018 K K
New Delivery Van(Net) 2,200.00
Motor expenses 986.00
Furniture and equipment:
Cost 8,000.00
Depreciation - 1 June 2017 2,400.00
Old Delivery Van:
Cost 2,000.00
Depreciation - 1 June 2017 1,000.00
Loan @9% (repayable in five years) 5,000.00
Purchases 73,010.00
Returns Inwards 1,076.00
Returns Outwards 3,720.00
Discounts 1,870.00 965.00
Credit Sales 96,520.00
Cash Sales 30,296.00
Duty 11,760.00
Carriage In 2,930.00
Carriage Out 1,762.00
Sales Commission 711.00
Salesman's Salary 3,970.00
Office Salaries 7,207.00
Bank Charges 980.00
Loan Interest 450.00
Light and heat 2,653.00
Sundry expenses 2,100.00
Rent 3,315.00
Insurance 4,000.00
Printing and Postage 2,103.00
Advertising 1,044.00
Bad debts 1,791.00
Allowance for receivables 437.00
Inventory 7,650.00
Receivables 10,760.00
Payables 7,411.00
Cash at Bank 2,634.00
Cash in hand 75.00
Capital Account 15,258.00
Drawings 5,970.00 163,007.0 0 163,007.0 0
The following information is relevant:
(1) Closing inventory has been valued for accounts purposes at K8,490.00
(2) The motor van was sold on 31August 2017 and traded in against the cost of a new van. The trade-in price was K1,400.00 and the cost of the new van was K3,600.00 No entries have yet been made for this transaction apart from debiting the K2,200.00 cash paid to the New delivery van account.
(3) Straight-line depreciation is to be provided on a monthly basis at the following annual rates: Motor vans 25% Furniture and equipment 10%
(4) Past experience indicates that an allowance for receivables should be made equivalent to 5% of the closing receivables.
(5) An accrual of K372.00 is required in respect of light and heat.
(6) A quarter's rent to 30 June 2018 amounting to K900.00 was paid on 2 April 2018. Insurance for the year to31 March 2017 amounting to K1, 680.00 was paid on 16 April.
Question 1: Prepare income statement and a statement of financial position for the year ended 31 May 2018.