George Ltd. is a new business that started trading on 1 January 2019. You have recently been appointed as an accountant and have been presented with the following summary of transactions that have occurred during the first year of trading:

1) The owners introduced $300,000 of equity, which was paid into a bank account opened in the name of the business.

2) Premises were rented from 1 January 2019 at an annual rate of $80,000. During the year, rent of $100,000 was paid to the owner of the premises.

3) A delivery van was bought on 1 January 2019 for $50,000. This is expected to be used in the business for five years and then to be sold for $6,500.

4) Rates (a tax on business premises) were paid during the year as follows:

For the period 1 January 2019 to 31 March 2019 $1500

For the period 1 April 2019 to 31 March 2020 $6000

5) Electricity bills for the first three quarters of the year were paid totalling $3,500. After 31 December 2019, but before the financial statements had been finalised for the year, the bill for the last quarter arrived showing a charge of $1,300.

6) Wages totalling $65,000 were paid during the year. At the end of the year, the business owed $2,400 of wages for the last week of the year.

7) Sales revenue on credit totalled $425,000 (cost of sales $181,000).

8) Cash sales revenue totalled $101,000 (cost of sales $42,000).

9) Inventories totalling $260,000 were bought on credit.

10) Inventories totalling $38,000 were bought for cash.

11) Receipts from trade receivables totalled $257,000.

12) Payments to trade payables totalled $226,000.

13) The delivery van travelling expenses paid totalled $28,000.

At the end of the year it was clear that a credit customer (trade receivables) who owed $3,700 would not be able to pay any part of the debt. All of the other trade receivables were expected to settle in full. The business uses straight-line depreciation for non-current assets.

Required:
Prepare a Statement of Financial Position as at 31 December 2019 and a Statement of Profit and Loss for the year to that date.

Answer rating: 100% (QA)

5 Answer George Ltd Statement of Financial Position As of December 31 2019 Assets Amount Liabilities Amount Cash 140000 Utilities Payable 1300 Account... View the full answer