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Hussain owns a small business selling coffee makers to other businesses

Accounting

Hussain owns a small business selling coffee makers to other businesses. On 31st December 2019 he extracted the following trial balance.

Account Name

Debit $

Credit $

Sales Revenue

 

690,200

Sales returns

4,200

 

Opening inventory

103,600

 

Purchases

450,800

 

Purchase returns

 

1540

Freehold property

280,000

 

Equipment at cost

35,000

 

Accumulated depreciation on equipment

 

3,500

Motor vehicle

56,000

 

Accumulated depreciation on motor vehicle

 

11,200

Salaries and Wages

13,300

 

Insurance

1,680

 

Motor expenses

4,760

 

Advertising expenses

1,400

 

Loan interest

6,300

 

Receivables

91,000

 

Allowance for receivables

 

4,200

Payables

 

79,800

Cash at bank

15,400

 

Bank loan

 

      63,000

Capital

 

210,000

Total

1,063,440

1,063,440

The following information is relevant.

  1. Closing inventory was valued at $98,000.
  2. Equipment is depreciated by 10% on Straight line basis.
  3. Motor vehicles are depreciated by 20% on reducing balance basis.
  4. Accrued wages at the end of 2019 amount to $2,100.
  5. On 1 November 2019 Hussain paid $560 for insurance which is valid until 31 October 2020.
  6. Irrecoverable receivables of $4,200 need to be written off.
  7. Hussain decides to increase the allowance for receivable for five percent of the remaining outstanding receivables.
  8. Hussain has taken goods worth $2,660 for his own use.

 

Required:

  1. Prepare Hussain’s income statement for the year ending 31st December 2019.
  2. Prepare Hussain’s balance sheet as at December 2019.                  

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