Financial AccountsThe Assignment
Liam O’Brady owns a business selling musical instruments. The following trial balance has been extracted from the books of account at 31 October 2012.
Capital balance as at 1 November 201161489
Fixtures and fittings – at cost62200
Fixtures and fitting – provision for depreciation27990
Purchases and sales129745206543
Rent and rates10926
Inventory at 1 November 201148560
Accounts receivable and payable1128516407
Wages and salaries29551
W ages owing to employees at the period end amounted to £830.
The accountants invoice for preparing the full accounts is expected to be £720
Liam plays drums as a hobby. During the year, he took various items from the business for his own use. The items had a cost price of £1760
The landlord charges a total of £8000 per annum and the local authority levies rates at £2400 per annum.
Included in Accounts Receivable is an invoiced amount of £207. This has been outstanding for almost 12 months, and Liam accepts that it will not be paid. He also anticipates that 5% of the Accounts Receivable balance might not be paid. He thinks that provision should be made for this now.
Liam has recently discovered a small number of invoices which he paid for with his personal credit. Card. They total £642 and are mostly for materials used to repair the shop counter.
Depreciation is to be provided on fixtures and fittings at 20% per annum using the straight line basis.
During the year, Liam purchased a light van for £4200. This is to be included in the business and...