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The following trial balance was extracted from the books of Big Bamboo Limited on December 31,...

The following trial balance was extracted from the books of Big Bamboo Limited on December 31, 2020               

                                           Big Bamboo Ltd

Trial Balance as at January 1, 2020

Motor vehicle at cost

10,600

Provision for depreciation on Motor Vehicle

2,120

Building at cost

90,000

Provision for depreciation on Buildings

1,800

Stock at January 1, 2020

53,000

Carriage inwards

500

Debtors

50,130

Returns Inwards

6,000

Returns Outwards

5,560

Bad debt provision

1,100

Cash

3,200

Creditors

30,350

Bank overdraft

15,500

Sales

600,000

Purchases

440,000

Wages

93,200

Insurance

54,100

Discount received

8,300

Drawings

14,000

Capital

150,000

814,730

814,730

Additional Information:

1.      Stock at December 31, 2020 $80,000

2.      Payment of $10,100 for insurance relates to the first quarter of 2021.

3.      Wages owing $4,800

4.      Provision for bad debt is to be increased to $1,500

5.      Depreciation on fixed assets:

-          Motor vehicles 10% on cost

-          Buildings 15 % on the reducing balance method

Required:

Prepare for Big Bamboo Limited:

(a)    An income statement for the year ended December 31, 2020                      

(b)   A statement of financial position as at December 31, 2020                          

Solutions

Expert Solution

An income statement for the year ended December 31, 2020 of Big Bamboo limited

particulars amount amount
Revenue
sales 600000
return inwards 6000 594000
Discout received 8300
Total revenue 602300
expenses
Cost of goods sold 53000+440000-80000-5560 407440
wages 93200
add outstandding wages 4800 98000
insurance 54100
Less perpaid -10100 44000
Depreciation
Motar vehicle 10% 10600*10% 1060
Building 15% (90000-1800)*15% 13230
carrige inwards 500
provision for bad debts 1500-1100 400
total expense 564630
Net profit trasnferred to balance sheet 37670

A statement of financial position as at December 31, 2020 of big bamboo limited

Liabilities amount amount
capital 150000
Less drawings -14000
add profit 37670 173670
current liabilities
bank overdraft 15500
creditors 30350
30350
bad debt prvision 1500
outstanding wages 4800
Total 225820
Assets
Fixed assets
Motar vehicle 10600
Less provison 3180 7420
building 90000
Less provison 15030 74970
current assets
closing stock 80000
Prepaid insurance 10100
debtors 50130
cash 3200
Total 225820

Kindly upvote and comment it will help me a lot

ekkarill92 answered 1 month ago
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