Adjustments for financial statements 28,8The folowing trial balance was extracte

Question

Adjustments for financial statements 28,8The folowing trial balance was extracted from the books of R Giggs at the close ot Dr 92,800 157,5 157.185 T Purchases and sales 3 Cash at bank gCash in hand 324 11,400 Capital account 1 March 2006 Dravvings Office furniture 17.100 2,900 3,400 31.400 PRent Wages and salaries Discounts 820 4,120 3,750 160 5,245 12,316 Accounts receivable and accounts payable nventory 1 March 2006 llowance for doubtful debts 1 March 2006 Delivery van an running costs 405 615 Bad debts written off 174375 174 375 Notes: (a) Inventory 28 February 2007 £2,400 (b) Wages and salaries accrued at 28 February 2007 £340 Rent prepaid at 28 February 2007 £230. (d) Van running costs owing at 28 February 2007 £72. (e) Increase the allowance for doubtful debts by £91. (f) Provide for depreciation as follows: Office furniture £380; Delivery van £1,250 -(c) Required: Draw up the income statement for the year ending 28 February 2007 together with a balance sheet as at 28 February 2007

Explanation / Answer

Working:

R.Giggs Income Statement for the year ended February 28, 2007 Sales Revenue 157165 Less: Discounts 820 Net sales 156345 Cost of goods sold 94360 Gross profit 61985 Expenses: Rent 3170 Wages and salaries 31740 Van running costs 687 Bad Debts expense 821 Depreciation Expense 1630 Total Expenses 38048 Net Income 23937 R.Giggs Balance Sheet as at February 28, 2007 Assets Cash 4424 Accounts Receivable 12316 Allowance for doubtful accounts 496 11820 Inventory 2400 Prepaid Rent 230 Office Furniture 2900 Acc.Depreciation - Office Furniture 380 2520 Delivery Van 3750 Acc.Depreciation - Delivery Van 1250 2500 Total Assets 23894 Liabilities and Owner's equity Accounts Payable 5317 Salaries and wages payable 340 Capital account Beginning balance 11400 Add: Net income 23937 35337 Less: Drawings 17100 Ending Balance 18237 Total liabilities and owner's equity 23894

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