Question 1 Mr

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Question 1 Mr. and Mrs. Sharma run a small private company selling swimwear from China. Mr. Sharma has asked you to prepare set of financial statement for the year ended 31 December 2020 as soon as possible as the previous accountant left the company at very short notice. Dr Cr £ £ 500 Audit and Accountancy Advertising Bank 900 1,500 Creditors 8,900 2,200 Long Term Bank Loan Debtors 41,350 8,500 Directors remuneration Electricity 2,800 Insurance 1,700 Fixtures and Fittings At Cost 80,000 Accumulated depreciation (at 1.1.2020) 40,000 Motor Vehicle 25,000 1,350 At Cost Accumulated depreciation (at 1.1.2020) Office expenses Ordinary £1 shares (issued and fully paid) Profit and loss account (at 1.1.2020) 5,700 20,000 13,200 Purchases 160,000 Rent and rates 7,500 Sales 285,000 14,000 Stock (at 1.1.2020) Wages and salaries 21,000 Bank Interest 200 £370,650 £370,650 Additional Information: 1. Stock at 31st December 2020 valued at cost amounted to £18000. 2. Depreciation is to be provided on fixtures and fittings at 25% on cost 10% on reducing balance method for motor vehicle. 3. Provision is to be made for electricity for £250. 4. Insurance paid in advance at 31st December 2020 amounted to £400. Required 1. Prepare Income statement for the year ended 31st December 2020. (10 Marks) 2. Prepare Balance Sheet as at 31st December 2020. (15 Marks) 3. Identify FIVE accounting concepts that have been applied in the preparation of financial Statements and explain their meaning. (10 Marks) Total 35 Marks