Essay on Business Studies

690 WordsMar 14, 20133 Pages
Financial Accounts The Assignment Liam O’Brady owns a business selling musical instruments. The following trial balance has been extracted from the books of account at 31 October 2012. Dr Cr £ £ Bank balance 19281 Capital balance as at 1 November 2011 61489 Carriage inwards 480 Carriage outwards 2110 Discounts 664 811 Drawings 28650 Fixtures and fittings – at cost 62200 Fixtures and fitting – provision for depreciation 27990 General expenses 7436 Insurance 1158 Purchases and sales 129745 206543 Rent and rates 10926 Returns 375 619 Inventory at 1 November 2011 48560 Accounts receivable and payable 11285…show more content…
During November sales of £3225 were recorded, as were purchases of £2300.The following matters also need to be taken into consideration: Eight classical guitars costing £220 each need to be repaired before they can be sold. It is expected that each guitar will cost £35 to repair and that they can then be sold for £260 each. Two drum kits, costing £900, would normally sell for £1200. They have been “on sale” at £1175 each for several months. It is decided to drop the sale price even further to £975 each and to re-skin some of the drums at a total cost of £130. According to the stock records, there are 27 recorders, with a value of £4 each. The stock-take revealed that there were only 22 recorders. G hjkjhlhljhjn Liam O’Brady Required tasks Task 1 Review the additional information items and prepare the journals that will be required. Each journal is to include a brief description indicating why it is required. Task 2 Stock is to be valued in accordance with accepted accounting practice. State what the standard practice is. Prepare a memorandum note for Liam O’Brady explaining any adjustments you propose to make to the stated stock value (£55630). State the final stock value that you propose to use. Show any workings. Task 3 Using the information given above prepare the Income Statement (Trading, profit and loss account) for the year ended 31 October 2012 and Statement of Financial Position (Balance sheet) as at 31 October 2012
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