The following items need to be appropriately rccognised for

The following items need to be appropriately rccognised for the ycar to December 31, 2015 PART ONE: FINANCIAL ACCOUNTINGG SECTIONA (Answer one question from this section) (i) Propcrty, plant and equipment are purchased for E100,000; (ii) Depreciation for the year equals £90,000; (iii) Credit sales (there are no cash sales) equal £1,300,000; (iv) Cash collccted from customers equals £1,250,000; (v) Cost of sales equals £810,000; (vi) Purchases of inventories oqual £850,000; (vii) Payments to suppliers oqual E830,000; (viii) Rent payments equal £45,000; the annual retal for the rented properties equal £40,000; (ix) Wages of E120,000 are paid during the year. At the end of the year, £12,000 in wages QUESTION Wardour Street Ltd is a dealer in marquees, which are sold to retailers. The Statement of Financial Position for 2014 is as follows: are owed; and 50,000 additional £1 shares are issued to shareholders for £100,000. (x) 2014 Required ASSETS Non-current assets Property, plant and equipment Current assets Inventories Trade receivables Prepaid rent Cash Prepare an Income Statement for the year to December 31,2015 and a Statement of Financial Position as at December 31, 2015 for Wardour Street Ltd. (a) 687,000 (20 marks) 236,000 146,000 10,000 (b) \'The Statement of Financial Position shows how much a business is worth and, hence, how much it would be valued at if it were put up for sale. Do you agree with this (10 marks) [Total: 30 marks] statement? Explain the reasons for your response. 396,000 1,083,000 Total assets EQUITY AND LIABILITIES Equity Ordinary share capital (E1, fully paid) Share premium Retained carnings 300,000 372,000 295,000 967,000 Current liabilities Trade payables Accrued wages 106,000 10,000 116,000 1,083,000 Total cquity and liabilities Property, plant and equipment have an original cost of £913,000 and associated accumulated depreciation of £226,000.

Solution

Wardour Street Ltd Income Statement for the period 2017 Particulars Amount Sales 1300000 Less Expenses Depreciation 90000 Cost of Sales 810000 Wages 122000 Rent 40000 Changes in Inventory 40000 1102000 Net Income 198000 Wardour Street Ltd Financial Position as at December 31,2014 Amount Particulars 2015 2014 ASSETS Non-Current Assets Property Plant and Equipment 697000 687000 Current Assets Inventories 276000 236000 Trade Receivables 196000 146000 Prepaid Rent 15000 10000 Cash 259000 4000 Total Assets 1443000 1083000 Equity and Liabilities Equity Ordinary Share Capital 350000 300000 Share Premium 422000 372000 Retained Earnings 533000 295000 1305000 967000 Current Libilities Trade Payables 126000 106000 Acrrued Wages 12000 10000 138000 116000 Total Equity and Liabilities 1443000 1083000 Depreciation Schedule Opening WDV Additions Accumulated Depreciation Depreciation for the year Closing WDV 913000 100000 226000 90000 697000 Trade Payables Particluars Amount Particluars Amount To Cash A/c 830000 By Balance b/d 106000 To balance c/d 126000 By Purchases 850000 Total 956000 Total 956000 Trade Receivables Particluars Amount Particluars Amount To Balance b/d 146000 By Cash 1250000 To Sales 1300000 By balance b/d 196000 Total 1446000 Total 1446000 Cash A/c Particluars Amount Particluars Amount To balance b/d 4000 By Trade Payables 830000 To Trade Receivables 1250000 By Property plant and Equipment 100000 To Original Share Capital 50000 By Rent 40000 To Share Premium 50000 By Prepaid Rent 5000 By Wages 120000 By balance b/d 259000 Total 1354000 Total 1354000 Calculation of Closing Inventory Cost of Sales Openin balance+Purchases-Closing Stock Closing Stock Opening balance+Purchases-Cost of Sales 236000+850000-810000 276000