GB518_Assignment 4_Question 5_TT Ltd

Question 5 (20 marks)

The following is the statement of financial position of TT Ltd. at the
end of the first year of trading

Statement of Financial Position as at 31st
December 2013

Current Assets

Cash At Bank

$750

Prepaid Expenses

$5 300

Accounts Receivable

$19,600

Inventory

$65,000

$90,650

Non-Current Assets

Motor Vehicles- Cost

$12,000

Accumulated Depreciation

($2,500)

$9,500

TOTAL ASSETS

$100,150

Current Liabilities

Accrued Expenses

$1,250

Accounts Payable

$22,000

$23,250

Owner’s Equity

Original

$50,000

Retained Profit

$26,900

$76,900

Total Liabilities And Owner’s Equity

$100,150

·
Prepaid expenses
included $5,000 for rent and $300 for rates.
·
Accrued expenses
included wages of $630 and electricity of $620.

During 2014, the following transactions took place:

·
The owner’s withdrawal
capital In the form of cash of $20,000

·
A premise continues to
be rented at an annual rental of $20,000. During the year, rent of $15,000 was
paid to owner of the premises.

·
Rates on the premises
were paid during the year for period 1st April 2014 to 31st
March 2015, $1,300.

·
A second delivery
vehicle was bought on 1st January for $13,000. This is expected to be used in business
for four years and then be sold for $3,000.

·
Wages totalling $36,700
were paid during the year. At the end of the year the business owed $860 of
wages for the last week of the year,

·
Electricity bills
totalling $1,820 for the first three quarters of the year were paid. After 31st
December 2014, once the accounts had been finalised for the year, the bill for
the last quarter arrived showing a charge of $690.

·
Inventory totalling
$67,000 was bought on credit.

·
Inventory totalling $8,000
was bought for cash.

·
Sales on credit totalled
$179,000 (cost $89,000).

·
Cash sales totalled
$54,000 (cost $25,000).

·
Receipts from accounts
receivable totalled $178,000.

·
Payments to accounts
payable totalled $71,000.

·
Vehicle running expenses
paid totalled $16,200.

REQUIRED

Prepare a Statement of Financial Position as at 31st December 2014 and a
Statement of Comprehensive Income for the year to date.