Use the following list of transactions and the balance sheet for 2019 of ABC Ltd. to prepare: a)  The income statement for 2020 b)  The balance sheet for 2020 Insurance is paid on 1/7/2019 for 8,000 £. The policy covers the period until 31/6/2020 Rent for the year is 24,000 £. During the year, the company paid 23,000 £ to its landlord ABC Ltd. employs 4 members of staff, each with a yearly salary of 45,500 £. At the end of the year, ABC owes its staff one week of wages.

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Chapter1: Financial Statements And Business Decisions
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Question 1

Use the following list of transactions and the balance sheet for 2019 of ABC Ltd. to prepare:

  1. a)  The income statement for 2020

  2. b)  The balance sheet for 2020

  1. Insurance is paid on 1/7/2019 for 8,000 £. The policy covers the period until 31/6/2020

  2. Rent for the year is 24,000 £. During the year, the company paid 23,000 £ to its landlord

  3. ABC Ltd. employs 4 members of staff, each with a yearly salary of 45,500 £. At the end of

    the year, ABC owes its staff one week of wages.

  4. Inventories were bought for 35,000 £ in cash and 176,000 £ on credit.

  5. Cash sales were 67,500 £ (cost of sales 32,000) and credit sales 383,400 (cost of sales

    112,300).

  6. A customer returned 5,700 £ worth of goods receiving a cash refund.

  7. The company received payments of 343,500 £ from trade receivables. A customer paid

    early and the company granted him a discount of 2,000 £.

  8. ABC paid 134,600 £ towards trade payables.

  9. Electricity expenses were 7,500 £ for the first three quarter of the year. The bill for Q4 will

    be paid in January and the company expects electricity costs to be constant.

  10. ABC paid 3% interest over its loan balance at the beginning of the year. Over the year, the

    company paid back 20,000 £ to the bank.

  11. ABC sold its vehicle in December for 15,000 £ in cash. Depreciation on the vehicle is

    charged in full during the year.

  12. Corporation tax is 20%. Taxes are paid 50% in arrears.

  13. Vehicles are depreciated using the reducing balance method, with 30% yearly.

    depreciation. Depreciation on machinery is 5,000 £ and on building 3,000 £.

  14. ABC paid a dividend of 15,000 £ to shareholders.

 

Show your workings clearly and explain your answers.

Assets
2019
125,000
60,000
25,000
84,300
76,100
3,000
4,500
61,300
439,200
Non-current
Buildings
Machinery
Vehicles
Current
Inventories
Trade Receivables
Prepaid Insurance
Prepaid Rent
Cash
Total Assets
Liabilities
Trade Payables
Accrued Wages
Accrued Electricity
Current Tax Payable
95,700
2,800
2,300
3,650
150,000
100,000
84,750
Total Liabilities & Equity 439,200
Current
Non-current
Bank Loan
Share Capital
Retained Earnings
Equity
Transcribed Image Text:Assets 2019 125,000 60,000 25,000 84,300 76,100 3,000 4,500 61,300 439,200 Non-current Buildings Machinery Vehicles Current Inventories Trade Receivables Prepaid Insurance Prepaid Rent Cash Total Assets Liabilities Trade Payables Accrued Wages Accrued Electricity Current Tax Payable 95,700 2,800 2,300 3,650 150,000 100,000 84,750 Total Liabilities & Equity 439,200 Current Non-current Bank Loan Share Capital Retained Earnings Equity
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