b) Expenses Unpaid: - Motor Expenses Ghc200 Insurance Ghc450 - Sundry Expenses Ghc400 (c) Prepaid Expenses: - Rates Ghc320 - Sundry Expenses Ghc250 (d) Allowance for receivables to be increased to Ghc2,800 (e) Part of the Premises is sublet at Ghc2,400 per annum (f) Monthly salaries and wages bill Ghc400 (g) Bad debt at 31 December 2019 Ghc600 (h) Loan interest is 5% per annum (i) Provide for depreciation on a straight line method: - Premises 2%; Plant and Machinery 25% - Motor Vehicle 10% G) Write off Preliminary expenses (k) Transfer to general reserves Ghc5,0000 and Ghc5,000 to revenue reserves You are required to: a)Prepare the Income Statement for the year b)Prepare the appropriation Account c)Would you invest in this company base on your answer in (a) ? Give reasons and indicate two benefits that you will gain from such investment (d)Looking at the debtors figure and cash in hand would you say the company is overtrading? Give reasons
b) Expenses Unpaid: - Motor Expenses Ghc200 Insurance Ghc450 - Sundry Expenses Ghc400 (c) Prepaid Expenses: - Rates Ghc320 - Sundry Expenses Ghc250 (d) Allowance for receivables to be increased to Ghc2,800 (e) Part of the Premises is sublet at Ghc2,400 per annum (f) Monthly salaries and wages bill Ghc400 (g) Bad debt at 31 December 2019 Ghc600 (h) Loan interest is 5% per annum (i) Provide for depreciation on a straight line method: - Premises 2%; Plant and Machinery 25% - Motor Vehicle 10% G) Write off Preliminary expenses (k) Transfer to general reserves Ghc5,0000 and Ghc5,000 to revenue reserves You are required to: a)Prepare the Income Statement for the year b)Prepare the appropriation Account c)Would you invest in this company base on your answer in (a) ? Give reasons and indicate two benefits that you will gain from such investment (d)Looking at the debtors figure and cash in hand would you say the company is overtrading? Give reasons
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 23E
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