The year-end Trial Balance of a business owned by Frances Inglish is shown. You have been provided with following information:

(a) On the basis of an inventory count conducted on 7 July 2010, the cost of inventory in hand was ascertained to be £138,000. During the seven days after 30 June purchases amounted to £7,000 and sales (at cost plus 25%) to £20,000.

(b) Goods costing £4,000 removed by Frances for personal use, and others costing £5,000 given away as prizes in a sales promotion exercise, have not been accounted for.

(c) A new vehicle was acquired on 1 October 2009 for £60,000. Motor vehicles and furniture need to be depreciated in the current year at 20% and 10% per annum respectively, using the straight-line method for vehicles and the reducing balance method for furniture.

(d) £14,000 included in transport expenses is for carriage inwards.

(e) The loan from London Bank was raised in 2008 and is repayable in 2013.

(f) Frances wishes to write off a trade debt of £5,000 and maintain the allowance at 4% of trade receivable.

Required: 

Prepare the Statement of income for the year ended 30 June 2010 and the Statement of financial position as at that date.

Transcribed Image Text:

Trial Balance as at 30 June 2010 £'000 Motor vehicles Accumulated depreciation - vehicles Furniture - furniture Accumulated depreciation Advertising Bank account Sales Allowance for doubtful debt Purchases Stationery Rent Inventory on 30 June 2009 Receivable/payables Drawings Staff salary Transport expenses Motor vehicle maintenance Cash account London Bank loan @ 8% Staff welfare Capital account 420 380 - 46 36 765 38 24 114 405 20 94 78 14 6 10 2,450 £'000 80 110 - 958 18 I - I 384 I I I 200 700 2,450