Assets and liabilities of a retail shop owned by Joe Ross are identified as stated.

Scenario (a): Assuming that no more information is available with regard to the business, estimate the profit from this business in 2011.

Scenario (b): Make a revised estimate of the profit John Ross earned from this shop if, in addition to the above information, you have been able to ascertain as follows:

(i) Joe Ross has no income other than from this shop.

(ii) Considering his style of living Joe Ross must be spending not less than £200 per week as household expenses.

Scenario (c): In addition to the information provided in scenarios (a) and (b), you have ascertained as follows:

(i) Purchases in the year ended 31 December 2011 were £486,200.

(ii) Non-current assets were acquired in the year for £60,000.

(iii) Joe’s personal diary records that he has drawn £200 per week to meet his household expenses and has paid for business expenses as stated in the box.

Required: 

Prepare the financial statements for 2011.

Transcribed Image Text:

As at 31 December Non-current assets at wdv Inventory at cost Trade receivables Cash and bank balance Trade payables 2010 £ 2011 41 240,000 284,000 112,400 138,200 136,800 164,600 12,600 15,400 62,500 77,800