A business owned by Philip Saunders sold some of its furniture for £18,000 on 31 December 2010, but had not accounted for the disposal when the year-end Trial Balance was extracted as shown.

You are informed as follows:

(a) Cost of inventory at year-end was £498,000.

(b) Furniture sold on the last day of the period had been acquired for £60,000 on 1 January 2008.

(c) Inventory costing £4,000 removed by Philip for personal use has not been accounted for.

(d) One-fourth of the cost is attributed to land which is not depreciated. Buildings and furniture are depreciated, using the straight-line method, at 2% and 10% per annum respectively.

(e) Interest, at 5% per annum, should be paid on the loan from Mrs Saunders obtained in 2008.

Required: 

The Statement of income for the year ended 31 December 2010 and the Statement of financial position as at that date.

Transcribed Image Text:

Trial Balance as at 31 December 2010 Trade receivables/payables Inventory as at 31.12.2009 Staff salary Advertising Sales Purchases O Cash and bank balance Capital account Loan from Mrs Saunders Other expenses Drawings by Mr Saunders Land and buildings at cost Furniture at cost Accumulated depreciation to 31 December 2009: Building Furniture £'000 £'000 412 498 574 295 172 - 3,358 122 214 57 1,600 300 I 1 4,942 - 1,000 300 240 124 7,104 7,104