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Question 2 ABC company is a small engineering firm. The following balances have been extracted from the accounts as at 31 December 2021. DR CR Capital Bank Transportation-in Transportation-out Sales and Purchases Discounts Equipment: $72,100 11,690 $640 1,270 1,510 2,190 At cost 77,360 Provision for depreciation 16,840 Drawings Long-term Loan Motor Expenses Premises: 10,740 20,000 16,740 At cost 60,000 Provision for depreciation 10,000 Purchases and Sales Shop Expenses Inventory as at 1 January 2021 Accounts Receivables and Payables Wages Telephone and Insurance Expenses Sales and Purchases Returns 132,700 276,300 21,380 35,820 12,490 46,330 1,750 1,300 9,210 1,700 Total 420,030 420,030 You have also been given the following information: 1. Inventory as at 31 December 2021 was valued at $29,700. 2. Motor expenses paid in advance were $350. 3. Wages unpaid at year end amounted to $1,840. 4. Equipment is to be depreciated at 12.5% using the reducing balance method. 5. Premises need to be depreciated using the straight-line method at 5%. a) Prepare an income statement (formerly a trading and profit and loss account) for the year ended 31 December 2021. b) Prepare a statement of financial position (formerly a balance sheet) as at 31 December 2021.

Question 2 ABC company is a small engineering firm. The following balances have been extracted from the accounts as at 31 December 2021. DR CR Capital Bank Transportation-in Transportation-out Sales and Purchases Discounts Equipment: $72,100 11,690 $640 1,270 1,510 2,190 At cost 77,360 Provision for depreciation 16,840 Drawings Long-term Loan Motor Expenses Premises: 10,740 20,000 16,740 At cost 60,000 Provision for depreciation 10,000 Purchases and Sales Shop Expenses Inventory as at 1 January 2021 Accounts Receivables and Payables Wages Telephone and Insurance Expenses Sales and Purchases Returns 132,700 276,300 21,380 35,820 12,490 46,330 1,750 1,300 9,210 1,700 Total 420,030 420,030 You have also been given the following information: 1. Inventory as at 31 December 2021 was valued at $29,700. 2. Motor expenses paid in advance were $350. 3. Wages unpaid at year end amounted to $1,840. 4. Equipment is to be depreciated at 12.5% using the reducing balance method. 5. Premises need to be depreciated using the straight-line method at 5%. a) Prepare an income statement (formerly a trading and profit and loss account) for the year ended 31 December 2021. b) Prepare a statement of financial position (formerly a balance sheet) as at 31 December 2021.

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter12: Fainancial Statement Analysis
Section: Chapter Questions
Problem 63BE: Asset Efficiency Ratios Rumsford Inc.s financial statements for 2019 indicate the following account...
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Question 2 ABC company is a small engineering firm. The following balances have been extracted from the accounts as at 31 December 2021. DR CR Capital Bank Transportation-in Transportation-out Sales and Purchases Discounts Equipment: $72,100 11,690 $640 1,270 1,510 2,190 At cost • Provision for depreciation 77,360 16.840 Drawings Long-term Loan Motor Expenses Premises: 10,740 20,000 16,740 At cost 60,000 Provision for depreciation 10,000 132,700 276,300 21,380 35,820 Purchases and Sales Shop Expenses Inventory as at 1 January 2021 Accounts Receivables and Payables Wages Telephone and Insurance Expenses Sales and Purchases Returns 9,210 12,490 46,330 1,750 1,300 1.700 Total 420,030 420,030 You have also been given the following information: 1. Inventory as at 31 December 2021 was valued at $29,700. 2. Motor expenses paid in advance were $350. 3. Wages unpaid at year end amounted to $1,840. 4. Equipment is to be depreciated at 12.5% using the reducing balance method. 5. Premises need to be depreciated using the straight-line method at 5%. a) Prepare an income statement (formerly a trading and profit and loss account) for the year ended 31 December 2021. b) Prepare a statement of financial position (formerly a balance sheet) as at 31 December 2021.
Transcribed Image Text:Question 2 ABC company is a small engineering firm. The following balances have been extracted from the accounts as at 31 December 2021. DR CR Capital Bank Transportation-in Transportation-out Sales and Purchases Discounts Equipment: $72,100 11,690 $640 1,270 1,510 2,190 At cost • Provision for depreciation 77,360 16.840 Drawings Long-term Loan Motor Expenses Premises: 10,740 20,000 16,740 At cost 60,000 Provision for depreciation 10,000 132,700 276,300 21,380 35,820 Purchases and Sales Shop Expenses Inventory as at 1 January 2021 Accounts Receivables and Payables Wages Telephone and Insurance Expenses Sales and Purchases Returns 9,210 12,490 46,330 1,750 1,300 1.700 Total 420,030 420,030 You have also been given the following information: 1. Inventory as at 31 December 2021 was valued at $29,700. 2. Motor expenses paid in advance were $350. 3. Wages unpaid at year end amounted to $1,840. 4. Equipment is to be depreciated at 12.5% using the reducing balance method. 5. Premises need to be depreciated using the straight-line method at 5%. a) Prepare an income statement (formerly a trading and profit and loss account) for the year ended 31 December 2021. b) Prepare a statement of financial position (formerly a balance sheet) as at 31 December 2021.
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