B Butler is a general dealer who started business on 1 January Year 2. Equipment costing £35,000 was acquired on that date and depreciation is calculated at 10% per annum on cost

3. B Butler is a general dealer who started business on 1 January Year 2.
Equipment costing £35,000 was acquired on that date and depreciation is
calculated at 10% per annum on cost.
A vehicle was acquired on 1 January Year 2 at a cost of £15,000 and an additional
vehicle was purchased on 1 July Year 4 at a cost of £10,000. Depreciation is
charged at 20% per annum on the written down value.
Depreciation on all assets is chargeable from date of purchase.
On 1 January Year 5 he had the following assets and liabilities.
Assets and liabilities £
Equipment ?
Vehicles ?
Stock 14,920
Bank Overpublish 10,350
Debtors 11,350
Creditors 2,610
Lighting and Heating due 300
Below is a summary of the entries made in the cash book for the year ended
31 December Year 5.
Receipts £
Cash Sales 28,240
Received from Debtors 18,830
Payments
Wages 10,940
Rent and Rates 8,200
New Equipment purchased 1 July 2,000
Cash Purchases 4,200
Paid to Creditors 19,220
Drawings 15,000
Vehicle Running Expenses 4,860
Heating and Lighting 1,330

The following additional information was provided on 31 December Year 5:
1 The stock of goods for resale was valued at £11,000.
2 Debtors and Creditors were £7,800 and £5,600 respectively.
3 Discounts received and allowed during the year amounted to £250 and
£400 respectively.
4 Bad debts written off during the year amounted to £1,800. Butler
decides to create a provision for doubtful debts of 5% per annum.
5 Amounts owing
Rent and Rates £90
Heating and Lighting £120
6 Vehicle running expenses prepaid £190.
(a) You are required to calculate:
(i) Butler’s opening capital on 1 January Year 5;
(ii) Total Sales for year ended 31 December Year 5;
(iii) Total Purchases for year ended 31 December Year 5.
(b) Using the above information prepare the Trading and Profit and Loss Accounts
for the year ended 31 December Year 5 and the Balance Sheet at that date.

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