Reference no: EM131436232
Question: The following is the balance sheet of WW Company as at 31 December 2004:
During 2005 the following transactions took place:
1. The owners withdrew capital in the form of cash of £23,000.
2. Premises were rented at an annual rental of £20,000. During the year, rent of £25,000 was paid to the owner of the premises.
3. Rates on the premises were paid during the year for the period 1 April 2005 to 31 March 2006 and amounted to £2,000.
4. Some machinery (a non-current asset), which was bought on 1 January 2004 for £13,000, has proved to be unsatisfactory. It was part-exchanged for some new machinery on 1 January 2005, and WW Limited paid a cash amount of £6,000. The new machinery wouldhave cost £15,000 had the business bought it without the trade-in.
5. Wages totalling £23,800 were paid during the year. At the end of the year, the business owed £860 of wages.
6. Electricity bills for the four quarters of the year were paid totalling £2,700.
7. Inventories totalling £143,000 were bought on credit.
8. Inventories totalling £12,000 were bought for cash.
9. Sales revenue on credit totalled £211,000 (cost £127,000).
10. Cash sales revenue totalled £42,000 (cost £25,000).
11. Receipts from trade receivables (debtors) totalled £198,000.
12. Payments to trade payables (creditors) totalled £156,000.
13. Van running expenses paid totalled £17,500.
The business uses the reducing-balance method of depreciation for non-current assets at the rate of 30 per cent each year.
Required: Prepare a balance sheet as at 31 December 2005 and an income statement (profit and loss account) for the year to that date.
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