A Bill Smithson runs a second-hand furniture business from a shop which he rents. He does not keep complete accounting records, but is able to provide you with the following information about his financial position at 1 April 2018: Inventory of furniture \(£ 3,210\); Trade receivables \(£ 2,643\); Trade payables \(£ 1,598\); Motor vehicle \(£ 5,100\); Shop fittings \(£ 4,200\); Motor vehicle expenses owing \(£ 432\).

He has also provided the following summary of his bank account for the year ended 31 March 2019:

All cash and cheques received were paid into the bank account immediately.
You find that the following must also be taken into account:
Depreciation is to be charged on the motor vehicle at \(20 \%\) and off the shop fittings at \(10 \%\), calculated on the book values at 1 April 2018 plus additions during the year.
- At 31 March 2019 motor vehicle expenses owing were \(£ 291\) and insurance paid in advance was \(£ 177\).
- Included in the amount paid for shop fittings were:
a table bought for \(£ 300\), which Smithson resold during the year at cost, some wooden shelving (cost \(£ 250\) ), which Smithson used in building an extension to his house.

Other balances at 31 March 2019 were:

\section*{Required:}

(a) For the year ended 31 March 2019:
(i) calculate Smithson's sales and purchases, (ii) prepare his income statement.

(b) Prepare Smithson's balance sheet as at 31 March 2019.

Transcribed Image Text:

Balance at 1 April 2018 Cheques received from trade debtors Cash sales 2,420 44,846 3,921 51,187 Payments to trade payables Electricity Telephone Rent Advertising Shop fittings Insurance Motor vehicle expenses Drawings Balance at 31 March 2019 22,177 1,090 360 2,000 1,430 2,550 946 2,116 16,743 1,775 51,187