Shauna owns a transport and warehousing business which has a financial year end of 30 June 2020. The trial balance of the business includes the following items. All balances are as at 1 July 2019, other than the Receivables balance, which is at 30 June 2020:

 Dr Cr £ £ Buildings 560,000 Accumulated depreciation: buildings 112,400 Plant and equipment 300,000 Accumulated depreciation: plant and equipment 140,000 Lorries 470,000 Accumulated depreciation: lorries 188,000 Receivables 930,000 Allowance for irrecoverable receivables 25,50

The business has the following accounting policies for depreciation: (i) Depreciation • Buildings 2% per annum straight-line basis • Plant and equipment 10% per annum straight-line basis • Lorries 20% reducing balance basis (ii) Allowance for irrecoverable receivables is 3% Notes: Depreciation is calculated on a monthly basis. Shauna purchased a warehouse on 1 July 2019 for £220,000. The seller accepts a warehouse on the same trading account in part exchange, at a trade-in-value of £50,000. That warehouse disposed of had a cost of £120,000 and accumulated depreciation book value of £56,000. Plant and equipment costing £70,000 is sold on 1 February 2020 for £24,000. Accumulated depreciation at 1 July 2019 is £42,000. Shauna learns that Bakkie Ltd has gone into liquidation and therefore the business will not receive the amount from them of £6,300, which it is owed.

(a) Calculate the income statement balances for depreciation, profit or loss on disposal of non-current assets and the allowance for irrecoverable receivables. Show all of your workings.

 (b) Prepare the non-current asset note. Your note should include the cost, as adjusted for additions and disposals.

 (c) Calculate and state the balance for receivables that will be reported on the face of the balance sheet.

Answer rating: 100% (QA)

a Calculation of Income Statement Balances i Depreciation Buildings Depreciation rate 2 per annum 12 months 01667 per month Depreciation expense 56000... View the full answer