Reference no: EM133105146
Question - Recognition of Revenue & Expenses - TT and Co. is a new business that started trading on 1 Jan 2018. The following is a summary of transactions that occurred during the first year of trading:
1. Premises were rented from 1 Jan 2018 at an annual rental of £20,000. During the year, rent of £25,000 was paid to the owner of the premises.
2. Rates (a tax on business premises) was paid during the year as follows:
For the period 1 Jan 2018-31 Mar 2018 £500
For the period 1 April 2018-31 Mar 2019 £1,200
1. Wages totalling £33,500 were paid during the year. At the end of the year, the business owed £630 of wages for the last week of the year.
2. Electricity bills for the first 3 quarters of the year were paid totalling £1,650. After 31 Dec 2018, but before the financial statements had been finalised for the year, the bill for the last quarter arrived showing a charge of £620.
3. Sales revenue on credit totalled £152,000 (cost of sales £74,000)
4. Cash sales revenue totalled £35,000 (cost of sales £16,000)
5. Van running expenses paid totalled £9,400.
Required -
1. How much revenue should be recognised in 2018?
2. How much cost of sales should be recognised in 2018?
3. How much rents should be recognised in 2018?
4. How much rates should be recognised in 2018?
5. How much wages should be recognised in 2018?
6. How much electricity bills should be recognised in 2018?
7. How much van running expenses should be recognised in 2018?
8. How much is gross profit in 2018?