John Hanning owns a small hotel. The following balances were taken from his books on 31...

John Hanning owns a small hotel. The following balances were taken from his books on 31 December 2016

Takings (Sales)
Premises, at Cost
Fixtures and Fittings at cost

Minibus
Provision for depreciation, 1 January 2016: Fixtures and fittings

Minibus
Stock of wine, 1 January 2016 Debtors
Creditors
Bank overdraft
Cash in hand
Wages
Cleaning
Purchase of food and wine Running expenses of minibus Bank interest (Dr Balance) Advertising
General expenses
Capital

Drawings

$

283,670.00 396,000.00 100,000.00

10,000.00

45,600.00 3,600.00 1,200.00 6,500.00 3,970.00

16,450.00 700.00 61,020.00 27,830.00 121,700.00 4,800.00 1,520.00 5,880.00 13,140.00 427,000.00 30,000.00

Page 2 of 6

Additional information:

Depreciation policies:

The fixtures and fittings should be depreciated at 15% on cost. The minibus should be depreciated at 20% of the written down value.
$3,000 of the total for the purchase of food and wine was in respect of food used by Larsen and his family.
Stock of wine at 31 December 2016 was $1,340.
Bank interest of $280 had accrued at 31 December 2016.
Advertising, costing $900, had been paid in December 2016. This was for advertising leaflets to be published in 2017.
Bad debts, $1,190, were to be written off.

REQUIRED

(a) Prepare the Income Statement for the year ended 31 December 2016.

[20 Marks]
(b) Prepare the Statement of Financial Position as at 31 December 2016.

[20 Marks]

Expert Solution

ekkarill92 answered 2 years ago

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