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This is L1 material & you need to do this in order to build on this knowledge afor L2, The following Trial Balance has been extracted from the books of Avesco Plc, a retailer of fine Italian Goods, at 31 December 2018: Sales Purchases Inventory as at 1 Jan 2018 Rent Delivery expenses Administrative expenses Audit fee Directors' remuneration Freehold land and buildings at cost Fixtures and fittings at cost Motor vehicles at cost Accumulated depreciation on fixtures and fittings Accumulated depreciation on motor vehicles Receivables Bank Allowance for irrecoverable debts Payables 8% Debentures (redeemable 2028) £2 Ordinary share Share premium Retained earnings Ordinary dividend Debenture interest 8% £1 irredeemable preference shares Preference dividend Bank interest £000's 7,920 676 200 2,960 3,244 18 152 4,000 780 924 892 26 16 36 30 21,874 £000's 16,502 390 224 54 20 1,476 400 500 100 1,308 900 21,874 The information given below relates to the year ended 31 December 2018: 1) Depreciation on non-current assets is to be charged at the following rates: 20% by the reducing balance method on motor vehicles; 20% on cost by the straight line method on fixtures and fittings. Note: no non-current assets were purchased or disposed of during the year to 31 December 2018. 2) At 31 December 2018, additional delivery expenses accrued amounted to £88,000. 3) The figure for administrative expenses includes a prepayment of £36,000. 4) The annual rental of the premises is £120,000. No rent was owed at the start of the year. 5) For financial reporting purposes all expenses, other than delivery expenses and depreciation on relevant assets, ate.considered to be administrative expenses. 6) A bad debt of £12,000 is to be written off and an allowance for irrecoverable debts of 2% of remaining debts is to be provided. 7) The directors have proposed a final dividend of 12p per share on the ordinary shares, and propose to pay the remainder of the preference dividend - both to be paid on 30 April 2019. 8) The second instalment of debenture interest was due but unpaid as at 31 December 2018. 9) Inventory at 31 December 2018 amounted to £740,000 at cost and had a net realisable value of £700,000. 10) The corporation tax liability has been estimated to be £354,000. Required (round workings to the nearest £1,000): a) Prepare the Income Statement for Avesco Plc for the year ended 31 December 2018 together with an analysis of the expenses. (40%) b) Prepare the company's Statement of Financial Position at 31 December 2018 together with an analysis of non-current assets (40%) c) Explain the purpose of depreciation. (10%) This is L1 material & you need to do this in order to build on this knowledge afor L2, The following Trial Balance has been extracted from the books of Avesco Plc, a retailer of fine Italian Goods, at 31 December 2018: Sales Purchases Inventory as at 1 Jan 2018 Rent Delivery expenses Administrative expenses Audit fee Directors' remuneration Freehold land and buildings at cost Fixtures and fittings at cost Motor vehicles at cost Accumulated depreciation on fixtures and fittings Accumulated depreciation on motor vehicles Receivables Bank Allowance for irrecoverable debts Payables 8% Debentures (redeemable 2028) £2 Ordinary share Share premium Retained earnings Ordinary dividend Debenture interest 8% £1 irredeemable preference shares Preference dividend Bank interest £000's 7,920 676 200 2,960 3,244 18 152 4,000 780 924 892 26 16 36 30 21,874 £000's 16,502 390 224 54 20 1,476 400 500 100 1,308 900 21,874 The information given below relates to the year ended 31 December 2018: 1) Depreciation on non-current assets is to be charged at the following rates: 20% by the reducing balance method on motor vehicles; 20% on cost by the straight line method on fixtures and fittings. Note: no non-current assets were purchased or disposed of during the year to 31 December 2018. 2) At 31 December 2018, additional delivery expenses accrued amounted to £88,000. 3) The figure for administrative expenses includes a prepayment of £36,000. 4) The annual rental of the premises is £120,000. No rent was owed at the start of the year. 5) For financial reporting purposes all expenses, other than delivery expenses and depreciation on relevant assets, ate.considered to be administrative expenses. 6) A bad debt of £12,000 is to be written off and an allowance for irrecoverable debts of 2% of remaining debts is to be provided. 7) The directors have proposed a final dividend of 12p per share on the ordinary shares, and propose to pay the remainder of the preference dividend - both to be paid on 30 April 2019. 8) The second instalment of debenture interest was due but unpaid as at 31 December 2018. 9) Inventory at 31 December 2018 amounted to £740,000 at cost and had a net realisable value of £700,000. 10) The corporation tax liability has been estimated to be £354,000. Required (round workings to the nearest £1,000): a) Prepare the Income Statement for Avesco Plc for the year ended 31 December 2018 together with an analysis of the expenses. (40%) b) Prepare the company's Statement of Financial Position at 31 December 2018 together with an analysis of non-current assets (40%) c) Explain the purpose of depreciation. (10%)

Answer rating: 100% (QA)

Avesco Plc Inc Income Statement For the year ended December 2019 000 000 Revenue Sales 16502 Less Cost of goods sold 7856 Gross Profit 8646 Expenditur... View the full answer