Reference no: EM132466000
The following is the statement of financial position of WW Associates as at 31 Dec 2016. Statement of financial position as at 31 December 2016 $
ASSETS
Current assets
Cash ------------------------------------16,600
Prepaid expenses (rates)------------- 800
Trade receivables ------------------42,600
Inventories -------------------------24,400
84,400
Non-current assets
Machinery --------------------------50,600
Total assets ------------------------135,000
EQUITY AND LIABILITIES
Current liabilities
Accounts payable---------------------------33800
Accrued expenses (wages) -----------------3400
37200
Equity
Original ------------------------------------50,000
Retained earnings -------------------------47,800
97,800
Total equity and liabilities ---------------135,000
During 2017, the following transactions took place:
1. The owners withdrew equity in the form of cash of $46,000.
2. Premises were rented at an annual rental of $40,000. During the year, rent of $50,000 was paid to the owner of the premises.
3. Rates on the premises were paid during the year for the period 1 April 2017 to 31 March 2018 , and amounted to $4,000.
4. Some machinery (a non-current asset), which was bought on 1 January 2016 for $26,000, has proved to be unsatisfactory. It was part-exchanged for some new machinery on 1 January 2017 , and WW Associates paid a cash amount of $12,000. The new machinery would have cost $30,000 had the business bought it without the trade-in.
5. Wages totalling $47,600 were paid during the year. At the end of the year, the business owed $1,720 of wages.
6. Electricity bills for the four quarters of the year were paid totalling $5,400.
7. Inventories totalling $286,000 were bought on credit.
8. Inventories totalling $24,000 were bought for cash.
9. Sales revenue on credit totalled $422,000 (cost $254,000).
10. Cash sales revenue totalled $84,000 (cost $50,000).
11. Receipts from trade receivables totalled $396,000.
12. Payments to trade payables totalled $312,000.
13. Van running expenses paid totalled $35,000.
The business uses the reducing-balance method of depreciation for non-current assets at the rate of 30% each year.
internalize the transaction