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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

Income Statement :-

Particulars Amount($) Credit($)
Net Sale Revenue :-
Sales Revenue 600000
Less : Return Inwards 6000
Net Sales 594000 594000
Expenses :-
Cost of Goods Sold 399140
Wages (93200+4800) 98000
Insurance ($54100-$10100) 44000
Depreciation on Motor ($10600*10%) 1060
Depreciation on Building ($90000-$1800)*15% 13230
Carrige Inwards 500
Provision for Bad Debts ($1500-$1100) 400
Total Expenses 556330 556330
Net Income 37670

Cost of Goods Sold :-

= Begining Inventory + Purchase - Purchase Return - Discount Received - Ending Inventory

= $53000 + $440000 - $5560 - $8300 - $80000

= $399140

Balance Sheet :-

Asstes Amount($) Amount($)
Current Assets :-
Cash 3200
Stock 80000
Prepaid Insurance 10100
Debtors 50130
Total Current Assets 143430 143430
Fixed Assets :-
Motor Vehicle 10600
Less : Provision for Depreciation ($2120+$1060) (3180) 7420
Building 90000
Less : Provision for Depreciation ($1800+$13230) (15030) 74970
Total Assets 225820
Liabilities
Current Liabilities :-
Creditors 30350
Bad Debt Prvision 1500
Outstanding Wages 4800
Bank Overdraft 15500
Total Current Liabilities 52150 52150
Capital
Beginning Capital 150000
Add : Net Profit 37670
Less : Drawings (14000)
Total Capital 173670 173670
Total Liabilities and Capital 225820

ekkarill92 answered 3 years ago
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