Question 1 Use the following list of transactions and the balance sheet for 2020 of Renew Ltd. to prepare (all data expr

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Question 1 Use The Following List Of Transactions And The Balance Sheet For 2020 Of Renew Ltd To Prepare All Data Expr 1 (496.13 KiB) Viewed 52 times

Question 1 Use the following list of transactions and the balance sheet for 2020 of Renew Ltd. to prepare (all data expressed in £): a) The income statement for 2021. Show your calculations and explain them. [20 marks] b) The balance sheet for 2021. Show your calculations and explain them. [20 marks] 1. During 2021, the company paid wages for 85,000. Total wages for the year are 97,000. 2. Inventory for 21,000 was purchased for cash and for 132,000 for credit. 3. Sales revenue totalled 99,500 for cash and 273,000 for credit. 4. Cost of sales is 45% of the sale price. 5. Rent is paid quarterly in advance at the beginning of February, May, August and November. Each payment is for 3,600. 6. Rates of 3,400 were paid during the year, for the period 01-Apr-2021 to 31-Mar- 2022. 7. Bills of 6,700 were paid during the year. There was a bill outstanding for 2,500 at 31/12/2021. 8. At the end of 2020, a receivable for 2,000 was considered doubtful. During 2021, the customer paid us in full. 9. Receipts from trade receivables totalled 226,500. 10. Payments to trade payables totalled 153,000. The company received a discount of 3,000 for early repayment. 11. Vehicle expenses totalled 9,400. 12. Depreciation on buildings is 15,000 and machinery is depreciated using the reducing balance method with a 20% yearly reduction. 13. Vehicles are depreciated using the reducing balance method with a 40% yearly reduction. 14. At the end of 2021, the company exchanged its old vehicle for a new one worth 40,000, contributing 20,000 in additional cash. 15. The bank loan has a 5% interest rate, interest was paid in full during the year. 16. At the end of 2021, XYZ Ltd. borrowed 70,000 more from the bank. 17. Taxes are 25% of yearly profits, paid 50% in arrears. 18. During the year, the company paid a dividend of 8,000.