UESTION 1 Wardour Street Ltd is a dealer in marquees which a

UESTION 1 Wardour Street Ltd is a dealer in marquees, which are sold to retailers. The Statement of Financial Position for 2014 is as follows: Statement of financial position as at December 31, 2014 2014 ASSETS Non-current assets Property, Current assets Inventories Trade receivables Prepaid rent Cash plant and equipment 687,000 236,000 146,000 10,000 4,000 396,000 Total assets EQUITY AND LIABILITIES Equity Ordinary share capital (£1, fully paid) Share premium Retained earnings 300,000 372,000 295,000 67,000 Current liabilities Trade payables Accrued wages 106,000 10,000 116,000 1,083,000 Total equity and liabilities Property, plant and equipment have an original cost of £913,000 and associated accumulated depreciation of £226,000.

Solution

SOLUTION:- INCOME STATEMENT FOR THE YEAR ENDED DEC 31,2015

1300000

closing stock

( 236000+850000-810000)

wages :120000

less: accrued wages(10000)

rent 45000

+ prepaid of last year 10000

- prepaid of next year 15000

STATEMENT OF FINANCIAL POSITION:-

equity and liabilities

ordinary share capital ( 1 each , fully paid up) 300000

add: new shares 50000*1 = 50000

350000

expenditure	amount	income	amount
to opening stock	236000	sales	1300000
to purchases	850000	closing stock ( 236000+850000-810000)	276000
wages :120000 less: accrued wages(10000)	110000
to gross profits	380000
total	1576000	total	1576000
depreciation	90000	gross profits	380000
rent 45000 + prepaid of last year 10000 - prepaid of next year 15000	40000
net profits	250000
total	380000	total	380000