2. the provision for doubtful debt is to equal 2% of trade receivables 3. Inventory at 31st December 2018 was valued at £5,758.50 4. Vehicle expenses owing £27.50 and rent prepaid £137.50 Required: Prepare an income statement of M.M. Bibsy for the year ending 31st December 2018 and a Statement of Financial Position.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1
The following Trial Balance relates to M.M. Bibsy for the year ending 31st
December 2018:
田
DR £
CR £
Capital
Drawings
Vehicle at cost
Accumulated/provision for depreciation - vehicle
Shop fittings at cost
Accumulated/provision for depreciation -
shopfitting
Purchases & Sales
Opening inventory
Trade receivables & Payables
18,087.50
9,525
4,000
1,750
3000
1200
84,216
52,620
4,713.50
1,920
487,50
3,393
Sales & Purchase returns
618.50
Discount allowed & Received
63.50
121.50
Wages
Vehicle expense
15,420.50
510.50
Rent
4,398
Heating and light
Telephone
General expenses
920
177.50
876
Irrecoverable debt written off
42.5
Provision for doubtful debts
75
Cash
Bank
77.50
10,709.50
109,461.50
Total
109,461.50
The following additional information is available relating to M.M. Bibsy:
1. depreciation is charged using the reducing balance method at the rates of
25% on vehicle and 10%, on shop fittings using the straight-line method
2. the provision for doubtful debt is to equal 2% of trade receivables
3. Inventory at 31st December 2018 was valued at £5,758.50
4. Vehicle expenses owing £27.50 and rent prepaid £137.50
Required:
Prepare an income statement of M.M. Bibsy for the year ending 31st December
2018 and a Statement of Financial Position.
Transcribed Image Text:1 The following Trial Balance relates to M.M. Bibsy for the year ending 31st December 2018: 田 DR £ CR £ Capital Drawings Vehicle at cost Accumulated/provision for depreciation - vehicle Shop fittings at cost Accumulated/provision for depreciation - shopfitting Purchases & Sales Opening inventory Trade receivables & Payables 18,087.50 9,525 4,000 1,750 3000 1200 84,216 52,620 4,713.50 1,920 487,50 3,393 Sales & Purchase returns 618.50 Discount allowed & Received 63.50 121.50 Wages Vehicle expense 15,420.50 510.50 Rent 4,398 Heating and light Telephone General expenses 920 177.50 876 Irrecoverable debt written off 42.5 Provision for doubtful debts 75 Cash Bank 77.50 10,709.50 109,461.50 Total 109,461.50 The following additional information is available relating to M.M. Bibsy: 1. depreciation is charged using the reducing balance method at the rates of 25% on vehicle and 10%, on shop fittings using the straight-line method 2. the provision for doubtful debt is to equal 2% of trade receivables 3. Inventory at 31st December 2018 was valued at £5,758.50 4. Vehicle expenses owing £27.50 and rent prepaid £137.50 Required: Prepare an income statement of M.M. Bibsy for the year ending 31st December 2018 and a Statement of Financial Position.
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