The trial balance of David Co as at 31 December2022 was as follows:

	Dr	Cr
£	£
Share capital		200,000
Sales		730,400
Purchases	533,600
Inventory at 1 January 2022	46,680
Return inwards	2,400
Return outwards		3,200
Wages	92,320
Rent and rates	26,000
Motor expenses	7,440
Insurance	1,520
Irrecoverable debts	1,968
Allowance for receivables: 1 January 2022		1,176
Sundry income		3,244
Light and heat	6,148
Bank overdraft interest	148
Motor vehicles at cost	48,000
– accumulated depreciation 1 Jan 2022		24,480
Fixtures and fittings at cost	56,000
– accumulated depreciation 1 Jan 2022		33,600
Land	200,000
Trade Receivables	34,660
Trade Payables		46,008
Bank	6,624
Income tax underprovision	200
Buildings at cost	200,000
– aggregate depreciation:1 Jan2022		12,000
Retained earnings at 1 Jan2022		209,600
	––––––––	––––––––
	1,263,708	1,263,708
	––––––––	––––––––

You are given the following additional information:

1. Inventory on 31 December 2022 was £51,360.
2. Rent was prepaid by £2,000 and light and heat owed was £920.
3. Land is to be revalued to £500,000 on 31 December 2022.
4. Following a final review of the receivables on 31 December 2022, David Co decided to write off another debt of £260. The entity also adjusted the allowance for receivables to £1,032 at 31 December 2022.
5. David Co estimated that the income tax charge on profit for the year was £14,600.
6. Depreciation is to be provided as follows:
   1. building – 2% annually, straight-line
   2. fixtures &fittings – straight-line method, assuming useful economic life of five years with no residual value
   3. motor vehicles – 30% annually on a reducing balance basis.

.

Required:

1. Prepare a statement of profit or loss and other comprehensive income for the year ended 31 December 2022.
2. Prepare a statement of financial position as of 31 December 2022 for David Co.

Answer rating: 100% (QA)

Statement of Profit or Loss and Other Comprehensive Income for the Year Ended 31 December 2022 Sales... View the full answer