Business Studies

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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.
DrCr

££

Bank balance19281

Capital balance as at 1 November 201161489

Carriage inwards480

Carriage outwards2110

Discounts664811

Drawings28650

Fixtures and fittings – at cost62200

Fixtures and fitting – provision for depreciation27990

General expenses7436

Insurance1158

Purchases and sales129745206543

Rent and rates10926

Returns375619

Inventory at 1 November 201148560

Accounts receivable and payable1128516407

Wages and salaries29551

333140333140

Additional information:

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...
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