The following information is relevant for end-of-period adjustments. 

1. Closing inventory on 31 December 2022 was £100,000. 

2. Depreciation on the motor vehicle is to be provided at 20% per annum on the reducing balance method. 

3. Depreciation on equipment is to be provided at 15% per annum on a straight-line basis, assuming no residual value. 

4. Barney Flames estimates that £10,000 due from customers will be irrecoverable and must be written off. 

5. The allowance for receivables is to be set at 10% of net receivables on 31 December 2022. 

6. Rent expense includes a prepayment of £5,000. 

7. The heating bill will arrive in the first week of January 2023 and about £1,500 is expected to relate to the year ended 31 December 2022. 

8. Advertising includes a payment of £5,400 made on 1 November 2022 relating to the three months to 31 January 2023. 

9. The long-term loan is repayable in 5 years' time. Interest payable on the loan is 12% and will be paid once per year.

 

-Prepare the income statement for Barney Flames for the year ended 31 December 2022. The income statement must show all amounts in whole pounds (£). Remember to clearly show all the workings. 

 

Transcribed Image Text:

Below is the trial balance of Barney Flames. Barney Flames Trial balance at 31 December 2022 Trading account: Sales Opening inventory Purchases Other revenue and expenses: Income from other services Rent Heating and lighting Advertising expense Wages Motor expenses Discounts allowed Balance sheet accounts: Motor vehicles at cost Motor vehicles - accumulated depreciation Equipment at cost Equipment - accumulated depreciation Receivables Allowance for receivables Bank 200,000 350,000 30,000 5,500 25,000 100,000 15,500 3,550 70,000 60,000 200,080 50,000 1,000,000 2,000 10,000 10,000 30,000 Below is the trial balance of Barney Flames. Barney Flames Trial balance at 31 December 2022 Trading account: Sales Opening inventory Purchases Other revenue and expenses: Income from other services Rent Heating and lighting Advertising expense Wages Motor expenses Discounts allowed Balance sheet accounts: Motor vehicles at cost Motor vehicles - accumulated depreciation Equipment at cost Equipment - accumulated depreciation Receivables Allowance for receivables Bank 200,000 350,000 30,000 5,500 25,000 100,000 15,500 3,550 70,000 60,000 200,080 50,000 1,000,000 2,000 10,000 10,000 30,000

Answer rating: 100% (QA)

Answer To prepare the income statement for Barney Flames for the year ended 31 December 2022 we nee... View the full answer