A company has produced its financial information for the year ended 31 December 2020: Date PURCHASES...

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A company has produced its financial information for the year ended 31 December 2020: Date PURCHASES 1 January 1 March Units 6,000 3,000 1 July 5,000 1 November 4,000 Unit Price 20.00 15.00 14.00 13.00 Date SALES 31 January 31 March Units 8,000 5,000 31 July 7,000 30 November 5,000 Unit Price 25.00 25.00 23.00 26.00 The company use a WAVCO approach to inventory valuation. Inventory as at 31st December 2019 amounted to 8,000 units at a purchase price of £21 per unit. On 1 January 2018, the company purchased machinery for £50,000. At the time of purchase it was estimated that the machinery would have a useful life of 8 years and a scrap value of £8,000. The company uses a sum of digits depreciation policy. At the start of the year the company spent £18,000 on an advertising campaign that will run equally throughout 2020, 2021 and 2022. On 31 December 2019 the company had £25,000 worth of trade receivables. On 31 December 2020 trade receivables amount to £30,000 but contain £2,000 owed to the company by a customer who has subsequently gone bankrupt. Each year the company applies a doubtful debt provision of 8% of its trade receivables. The company spent £12,000 on electricity for the year ended 31st July 2020. The bill for the year ended 31 July 2021 increased by 6% on the previous year and was settled on 1st September 2020. The company spent £9,000 on gas for the year ended 30th September 2020. The bill for the year ended 30th September 2021 increased by 5% on the previous year and was still outstanding by 31 December 2020. • The company owes £100,000 to the bank (repayment due 2029) at a 3% interest rate. Half of the interest bill was paid by year end. Corporation tax is estimated to be £26,000 and management are proposing a £40,000 dividend to shareholders. REQUIRED Using the information provided, produce an income statement for the company for the year ended 31 December 2020. (Total: 22 marks) A company has produced its financial information for the year ended 31 December 2020: Date PURCHASES 1 January 1 March Units 6,000 3,000 1 July 5,000 1 November 4,000 Unit Price 20.00 15.00 14.00 13.00 Date SALES 31 January 31 March Units 8,000 5,000 31 July 7,000 30 November 5,000 Unit Price 25.00 25.00 23.00 26.00 The company use a WAVCO approach to inventory valuation. Inventory as at 31st December 2019 amounted to 8,000 units at a purchase price of £21 per unit. On 1 January 2018, the company purchased machinery for £50,000. At the time of purchase it was estimated that the machinery would have a useful life of 8 years and a scrap value of £8,000. The company uses a sum of digits depreciation policy. At the start of the year the company spent £18,000 on an advertising campaign that will run equally throughout 2020, 2021 and 2022. On 31 December 2019 the company had £25,000 worth of trade receivables. On 31 December 2020 trade receivables amount to £30,000 but contain £2,000 owed to the company by a customer who has subsequently gone bankrupt. Each year the company applies a doubtful debt provision of 8% of its trade receivables. The company spent £12,000 on electricity for the year ended 31st July 2020. The bill for the year ended 31 July 2021 increased by 6% on the previous year and was settled on 1st September 2020. The company spent £9,000 on gas for the year ended 30th September 2020. The bill for the year ended 30th September 2021 increased by 5% on the previous year and was still outstanding by 31 December 2020. • The company owes £100,000 to the bank (repayment due 2029) at a 3% interest rate. Half of the interest bill was paid by year end. Corporation tax is estimated to be £26,000 and management are proposing a £40,000 dividend to shareholders. REQUIRED Using the information provided, produce an income statement for the company for the year ended 31 December 2020. (Total: 22 marks)

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