Reference no: EM133002593
Question - Emma's statement of financial position at 1 Jan 2011 contained the following assets: shop premises $60 000,fixtures $15000, van $10000,inventory $8000 and cash at bank $7000. Emma had no liabilities. On 1 Jan, Emma acquired an additional shop for $50000 and paid $10000 for new fixtures. To assist her paying for this expansion she borrowed $50000 from her bank, repayable in ten years, paying 10% interest per annum on 31 Dec.
During 2011 Emma made cash sales of $150000 and credit sales of $90000 of which $10000 was outstanding at the date of statement of financial position. Of this, it is estimated that $400 will not be received from a customer who has become bankrupt (This is a bad debt and should be treated as an expense).
Emma paid$146000 to her suppliers during the year and at the end of the year she still owed them $14000. She estimated the balance of inventory at 31 Dec 2011 to be $12000.
Emma made the following additional payments in 2011:
Wages $24000
Van Expenses $2000
Shop expenses $3000
Rates $1800
Miscellaneous expenses $2000
During the year, Emma's drawings amounted to $50000.
a) Prepare Emma's income statement for the year ended 31 December 2011.
b) Determine Emma's bank balance on 31 Dec 2011.
c) Prepare Emma's statement of financial position as at 31 Dec 2011.
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