Dana runs a recruitment agency from a freehold property which he had converted to office accommodation when he bought it four years ago.   Dana's trial balance for the year to 31st December 2019 was as follows:                                                                                                                                    Trial Balance Dr (£) Cr (£) Cars at cost 56,000   Accumulated depreciation of cars as at 1st January 2019   25,040 Freehold building at cost 215,000   Accumulated depreciation of freehold building as at 1st January 2019   43,000 Debtors 100,000   Bank / cash   20,714 Creditors   68,840 Provision for doubtful debts as at 1st January 2019   6,000 Long term loan (at 10% per annum)   100,000 Capital as at 1st January 2019   118,340 Drawings 8,314   Fee income   152,332 Administrative expenses 21,544   Loan interest (all relating to long term loan) 5,000   Bookkeeping and invoicing expenses 5,600   Insurance 58,400   Salaries and wages expenses 51,608   Entertainment 2,000   Electricity             6,000   Travelling expenses           4,800   Totals 534,266 534,266   Additional information”                                                                                                                    “Insurance prepaid as at 31st December 2019 was £191.” “Electricity owing as at 31st December 2019 were £390.” “The provision for doubtful debts should be adjusted to 4% of debtors.”                         “Depreciation is to be calculated as set out below:” “i) Depreciation is calculated at 25% on the reducing balance basis for the cars.                                                                                        ii) Depreciation is calculated on the straight-line basis at 5% of cost for the freehold building.”                           “Required”   “Prepare Dana's income statement for the year ending 31st December 2019 and a statement of financial position as at 31st December 2019.”

QUESTION 1

Dana runs a recruitment agency from a freehold property which he had converted to office accommodation when he bought it four years ago.

Dana's trial balance for the year to 31st December 2019 was as follows:                                                                                                                                   

Additional information”                                                                                                                   

1. “Insurance prepaid as at 31st December 2019 was £191.”
2. “Electricity owing as at 31st December 2019 were £390.”
3. “The provision for doubtful debts should be adjusted to 4% of debtors.”                        
4. “Depreciation is to be calculated as set out below:”

“i) Depreciation is calculated at 25% on the reducing balance basis for the cars.                                                                                       

1. ii) Depreciation is calculated on the straight-line basis at 5% of cost for the freehold building.”                        

“Required”

1. “Prepare Dana's income statement for the year ending 31st December 2019 and a statement of financial position as at 31st December 2019.”