ABC company is a small engineering firm. The following balances have been extracted from the accounts...

 

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ABC company is a small engineering firm. The following balances have been extracted from the accounts as at 31 December 2021. DR CR $72,100 11,690 Capital Bank Transportation-in Transportation-out Sales and Purchases Discounts Equipment: $640 1,270 1,510 2,190 • At cost • Provision for depreciation 77,360 16.840 10,740 Drawings Long-term Loan Motor Expenses Premises: 20,000 16,740 60,000 • At cost • Provision for depreciation 10,000 Purchases and Sales Shop Expenses Inventory as at 1 January 2021 Accounts Receivables and Payables Wages Telephone and Insurance Expenses Sales and Purchases Returns 132,700 276,300 21,380 35,820 12,490 46,330 1,750 1,300 9,210 1,700 Total 420,030 420,030 You have also been given the following information: 1. Inventory as at 31 December 2021 was valued at $29,700. 2. Motor expenses paid in advance were $350. 3. Wages unpaid at year end amounted to $1,840. 4. Equipment is to be depreciated at 12.5% using the reducing balance method. 5. Premises need to be depreciated using the straight-line method at 5%. a) Prepare an income statement (formerly a trading and profit and loss account) for the year ended 31 December 2021. (18 marks) b) Prepare a statement of financial position (formerly a balance sheet) as at 31 December 2021. (12 marks) ABC company is a small engineering firm. The following balances have been extracted from the accounts as at 31 December 2021. DR CR $72,100 11,690 Capital Bank Transportation-in Transportation-out Sales and Purchases Discounts Equipment: $640 1,270 1,510 2,190 • At cost • Provision for depreciation 77,360 16.840 10,740 Drawings Long-term Loan Motor Expenses Premises: 20,000 16,740 60,000 • At cost • Provision for depreciation 10,000 Purchases and Sales Shop Expenses Inventory as at 1 January 2021 Accounts Receivables and Payables Wages Telephone and Insurance Expenses Sales and Purchases Returns 132,700 276,300 21,380 35,820 12,490 46,330 1,750 1,300 9,210 1,700 Total 420,030 420,030 You have also been given the following information: 1. Inventory as at 31 December 2021 was valued at $29,700. 2. Motor expenses paid in advance were $350. 3. Wages unpaid at year end amounted to $1,840. 4. Equipment is to be depreciated at 12.5% using the reducing balance method. 5. Premises need to be depreciated using the straight-line method at 5%. a) Prepare an income statement (formerly a trading and profit and loss account) for the year ended 31 December 2021. (18 marks) b) Prepare a statement of financial position (formerly a balance sheet) as at 31 December 2021. (12 marks)

Answer rating: 100% (QA)

1 Income Statement 2 Balance Sheet The first statement shows the incom... View the full answer