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Hussain owns a small business selling coffee makers to other businesses. On 31st December 2019 he extracted the following trial balance.
| Account Name | Debit $ | Credit $ |
| Sales Revenue | | 690,200 |
| Sales returns | 4,200 | |
| Opening inventory | 103,600 | |
| Purchases | 450,800 | |
| Purchase returns | | 1540 |
| Freehold property | 280,000 | |
| Equipment at cost | 35,000 | |
| Accumulated depreciation on equipment | | 3,500 |
| Motor vehicle | 56,000 | |
| Accumulated depreciation on motor vehicle | | 11,200 |
| Salaries and Wages | 13,300 | |
| Insurance | 1,680 | |
| Motor expenses | 4,760 | |
| Advertising expenses | 1,400 | |
| Loan interest | 6,300 | |
| Receivables | 91,000 | |
| Allowance for receivables | | 4,200 |
| Payables | | 79,800 |
| Cash at bank | 15,400 | |
| Bank loan | | 63,000 |
| Capital | | 210,000 |
| Total | 1,063,440 | 1,063,440 |
The following information is relevant.
- Closing inventory was valued at $98,000.
- Equipment is depreciated by 10% on Straight line basis.
- Motor vehicles are depreciated by 20% on reducing balance basis.
- Accrued wages at the end of 2019 amount to $2,100.
- On 1 November 2019 Hussain paid $560 for insurance which is valid until 31 October 2020.
- Irrecoverable receivables of $4,200 need to be written off.
- Hussain decides to increase the allowance for receivable for five percent of the remaining outstanding receivables.
- Hussain has taken goods worth $2,660 for his own use.
Required:
- Prepare Hussains income statement for the year ending 31st December 2019.
- Prepare Hussains balance sheet as at December 2019.
Answer & Explanation
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