(a) The following trial balance was extracted from the books of M. Jackson on 30 April 2013....
Question:
(a) The following trial balance was extracted from the books of M. Jackson on 30 April 2013. From it, and the note below it, prepare his income statement for the year ending 30 April 2013, and a statement of financial position as at that date.
Closing inventory amounted to £4,000. Depreciation is to be charged at rates of 10 per cent on cost for fixtures and fittings and 25 per cent on cost for motor vehicles. Bad debts of £800 are to be written off.
(b) Michael has indicated that he thinks that the accounts receivable amounts that have been written off will be paid eventually. He is also querying why adjustments are made in the financial statements for bad debts and depreciation. Write a short note to him, making appropriate references to accounting concepts, outlining why these adjustments are made.
Step by Step Answer:
Frank Woods Business Accounting
ISBN: 9780273759287
12th Edition
Authors: Frank Wood. Sangster, Alan