The following is the statement of financial position of WW Associates as at 31 December 2008:

During 2009, the following transactions took place:
1 The owners withdrew equity in the form of cash of £23,000.
2 Premises were rented at an annual rental of £20,000. During the year, rent of £25,000 was paid to the owner of the premises.
3 Rates on the premises were paid during the year for the period 1 April 2009 to 31 March 2010 and amounted to £2,000.
4 Some machinery (a non-current asset), which was bought on 1 January 2008 for £13,000, has proved to be unsatisfactory. It was part-exchanged for some new machinery on 1 January 2009 and WW Associates paid a cash amount of £6,000. The new machinery would have cost £15,000 had the business bought it without the trade-in.
5 Wages totalling £23,800 were paid during the year. At the end of the year, the business owed £860 of wages.
6 Electricity bills for the four quarters of the year were paid totalling £2,700.
7 Inventories totalling £143,000 were bought on credit.
8 Inventories totalling £12,000 were bought for cash.
9 Sales revenue on credit totalled £211,000 (cost £127,000).
10 Cash sales revenue totalled £42,000 (cost £25,000).
11 Receipts from trade receivables totalled £198,000.
12 Payments to trade payables totalled £156,000.
13 Van running expenses paid totalled £17,500.
The business uses the reducing-balance method of depreciation for non-current assets at the rate of 30 per cent each year.


Required:

Prepare a statement of financial position as at 31 December 2009 and an income statement for the year to that date.

Transcribed Image Text:

Statement of financial position as at 31 December 2008 ASSETS Non-current assets Machinery 25,300 Current assets Inventories 12,200 21,300 Trade receivables Prepaid expenses (rates) 400 Cash 8,300 42,200 67,500 Total assets EQUITY AND LIABILITIES Equity Original Retained earnings 25,000 23,900 48,900 Current liabilities Trade payables Accrued expenses (wages) 16,900 1,700 18,600 Total equity and liabilities 67,500 Statement of financial position as at 31 December 2008 ASSETS Non-current assets Machinery 25,300 Current assets Inventories 12,200 21,300 Trade receivables Prepaid expenses (rates) 400 Cash 8,300 42,200 67,500 Total assets EQUITY AND LIABILITIES Equity Original Retained earnings 25,000 23,900 48,900 Current liabilities Trade payables Accrued expenses (wages) 16,900 1,700 18,600 Total equity and liabilities 67,500

Answer rating: 100% (QA)

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