income statement
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Free InquiryThe following information relates to Imperial Tech Ltd.
Trial Balance for the year ending 31 December 2015 |
|
£ |
|
Land and Buildings |
95,000 |
Trade receivables |
75,000 |
Purchases of inventory |
150,000 |
Retained Earnings at 31 December 2014 |
130,000 |
Inventories at 31 December 2014 |
15,000 |
Furniture and fixtures |
30,000 |
Sales revenue |
266,000 |
Distribution cost |
40,000 |
Administrative expenses |
50,000 |
Trade payable |
54,000 |
Motor vehicles (net book value) |
40,000 |
Cash and Bank |
55,000 |
Equity share capital |
80,000 |
Loan |
20,000 |
Total |
1,100,000 |
You are also given the following information, which is not reflected in the trial balance
Notes:1. Inventories at 31 December were £25,0002. Dividend proposed for 2015 was £7,000 and not yet paid3. An accrual for distribution cost of £3,000 was required at 31 December 20154. A prepayment of £5,000 was wrongfully booked on administrative expenses5. Tax was estimated at £19,000 to be payable on the profit of 20156. Annual depreciation charges on land & Buildings and Motor Vehicles are included in the administrativeexpenses and distribution costs, and in the accumulated depreciation used to calculate the net book values of £95,000 and £40,000 respectively, shown in the trial balance.7. The furniture and fixtures balance of £30,000 relates to the purchases of assets during 2015. The depreciation cost are not included in the trial balance yet. They are require to be calculated on a straight line basis for the full year of 2015, based on a useful life of eight years and an estimated residual value of £6,0008. Interest is 10% on the loan and not paid yet |
Required:
(a) Prepare the Income Statement of 2015 and Statement of Financial Position (Balance Sheet) as at the date. (20 marks)
(b) Explain what adjusting entries are. (10 marks)
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