Sara operates as a trader. She has drawn up her income statement for the year ended 31 December 2023, which shows a profit for the year of $20 180. She has closed the ledger accounts for income and expenses and has moved the closing inventory into the income statement.
The balances below are still in Sara’s ledger at 31 December 2023:
Premises (cost) $100 000
Fixtures and fittings (cost) $40 000
Accumulated depreciation on fixtures and fittings $15 000
Inventory (at 31 December 2023) $6 275
Trade receivables $8 540
Provision for doubtful debts $427
Trade payables $5 125
Bank overdraft $4 900
Cash $350
Long-term loan $12 000
Wages (accrued) $1 000
Capital (at 1 January 2023) $115 793
Drawings $19 260
(a)[4]
Draw up the inventory account for the year ended 31 December 2023. Balance the account and carry the balance down to 1 January 2024.
(b)[3]
Draw up the capital account for the year ended 31 December 2023. Balance the account and carry the balance down to 1 January 2024.
(c)[7]
Prepare the statement of financial position dated 31 December 2023.
(d)[5]
Advise Sara whether she ought to buy the delivery vehicle or not. Justify your answer by giving two advantages and two disadvantages of buying the delivery vehicle.
(e)[1]
State what is meant by the term revenue receipts.
Worked solution & mark scheme
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