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J Donegal,a sole proprietor,presents his trial balance for year ended 31st

By January 10, 2022No Comments

J Donegal,a sole proprietor,presents his trial balance for year ended 31stDecember 2020:EESales205,700Purchases104,580Plant and equipment (cost)90.000Vehicles (cost)62,000Inventory (1-1-20)48,600Provision for depreciation (1-1-20):Plant and equipment27.000Vehicles40,000Returns in700Carriage in400Wages37.000Rent15,000Heat and light6.000Irrecoverable debts1,500Specific allowance for receivables800Receivables42,000Payables29.600Rent owing (1-1-20)2.000Marketing expenses3.000Fuel and vehicle maintenance6.00015%Loan80.000Drawings19.000Bank15.000Capital (1-1-20)35,680435,780435.780Notes:1)Inventory valued at E51,200 on 31*December 20202)Depreciation charged at 10%straight line on plant and equipment and50%reducing balance on vehicles3)Rental charge is for 15 months to 31st January 20214)The heating and lighting bill has been paid up to 31*t October 2020.Thecharge accrues evenly through the year5)Donegal pays E500 per month for vehicle fuel and maintenance costs.However,the business possesses an unpaid bill at 31st December 2020from Ulster Garages Ltd for E1,500 for additional work required.Donegalaccepts the charge is due for payment.6)Donegal is fairly certain that£1,200 of receivables are unlikely to be paidV120212021 Northern Consortium Ltd.Page 2 of 6IDBFN001 Financial Accounting 17)During the year Donegal disposed of an item of plant,purchased in 2018for£10,000,forE6,000(no depreciation in year of sale).This transactionhas not been recorded in the books of account8)Commission of 1%on net sales is due to be paid to an agent.This shouldbe treated as a marketing expense.Required:(a)Prepare Donegal’s statement of profit or loss for year ended 31stDecember 2020 and a statement of financial position as at that date.[25]