Answer Happy

The following trial balance was extracted from the books of 'Cinderella' at the close of business on 31st December 2019 Debit Credit Inventory, 1 January 2019 21,000 Sales 567,000 Purchases 425,000 General Expenses 13,850 Salaries 46,080 Administrative Costs 12,800 Insurance 900 Rent 11,000 Returns (Sales & Purchase) 7,000 8,000 Discounts (Allowed & Received) 4,000 2,000 Bad debts 950 Plant 88,000 Equipment 154,000 Provision for depreciation: Plant 17,600 Provision for depreciation: Equipment 20,000 Provision for doubtful debts 560 Accounts Receivable / Debtors 15,500 Accounts Payable / Creditors 34,420 Bank 18,500 Capital 200,000 Drawings 31,000 Total 849,580 849,580 Adjustments: Note: adjustments must show calculations/workings 1. Inventory at 31 December 2019 £42,000 2. The provision for doubtful debts maintained at 8% of Accounts receivables 3. Depreciation is to be provided as follow: (i) plant 10% on cost, (ii) equipment 10% using reducing balance method 4. Accruals at 31 December 2019: Salaries £8,800; Administration costs £3,210 5. Insurance paid in advance at 31 December 2019 £90 Required: i. Prepare Statement of profit or loss (income statement) for Cinderella for the year ending 31 December 2019 ii. Prepare Statement of financial position (balance sheet) as at 31 December 2019