John Richard, registered for VAT purposes, extracted his Trial Balance as shown. You are informed as follows:

(a) VAT-inclusive prices of £9,400 and £23,500 paid on 1 January 2012 for furniture and motor vehicles respectively are included in the corresponding asset accounts.

(b) Furniture and motor vehicles are depreciated using the reducing balance method, at 10% and 20% per annum respectively, time apportioning for the months in use.

(c) Inventory as at 30 June 2012 cost £17,390 inclusive of VAT.

(d) £1,410 (inclusive of VAT) receivable from a customer is to be written off as bad.

(e) The VAT rate is 17.5%.

Required:

Prepare the Statement of income for the year ended 30 June 2012 and the Statement of financial position as at that date.

Transcribed Image Text:

Trial Balance as at 30 June 2012 Sales inclusive of VAT Purchases inclusive of VAT Inventory 30.6.2011 without VAT Furniture account Accumulated depreciation on furniture Motor vehicles Accumulated depreciation on vehicle Expenses inclusive of VAT Entertainment inclusive of VAT Receivables and payables Payments of VAT Cash and bank Richard's Capital account £ - 67,680 8,840 20,600 51,000 20,075 440 7,140 212 1,815 - 177,802 3 101,332 4,740 C- 7,500 - 4,230 - 60,000 177,802