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Question 1 (25 marks) Clockmaker Ltd. presents the following trial balance on 31/12/2021 (accounting-year end): Value (£) Inventory (01/01/2021) 70,000 Buildings 29,400 Accumulated depreciation on Buildings 4,000 (01/01/2021) Insurance expenses 60,000 Loan interest 6,000 Trade Receivables 40,000 Capital (184,000 shares of £1 each) 184,000 Purchases 230,000 Trade Payables 30,000 Sales of goods 260,000 Cash 104,100 Long Term Loan 20,000 Allowance for trade receivables Short Term Loan 1,500 40,000 Required: a) Prepare the Trial Balance corresponding to the above information indicating to which type of account belongs each of the accounts shown in the trial balance. (10 marks) b) Draw the journal entries corresponding to the following additional information: 1) Inventories were valued at £120,000 on 31/12/2021. 2) Clockmaker Ltd. pays £5,000 to suppliers. 3) Managers of Clockmaker Ltd. know for sure that customers will not pay £1,500. In addition, they estimate that the provision for doubtful debts needs to equal the 4% of the trade receivables final balance (after considering the trade receivables write off). 4) £500 of insurance expenses correspond to the next accounting period. 5) The company uses the straight-line method for depreciation. Buildings have a useful life of 10 years and a residual value of £10,400. 6) Clockmaker Ltd. issues 10,000 ordinary shares for a price of £1.5. 7) Corporate tax for the accounting period amounts to £2,212 and is paid on cash. Question 2 (25 marks) Considering the information in Question 1: Page 2 of 3 a) Prepare the Income Statement for Clockmaker Ltd. on 31/12/2021. (15 marks) (14 marks) b) Calculate the value of total assets from the Statement of Financial Position for Clockmaker Ltd. on 31/12/2021.

Question 1 (25 marks) Clockmaker Ltd. presents the following trial balance on 31/12/2021 (accounting-year end): Value (£) Inventory (01/01/2021) 70,000 Buildings 29,400 Accumulated depreciation on Buildings 4,000 (01/01/2021) Insurance expenses 60,000 Loan interest 6,000 Trade Receivables 40,000 Capital (184,000 shares of £1 each) 184,000 Purchases 230,000 Trade Payables 30,000 Sales of goods 260,000 Cash 104,100 Long Term Loan 20,000 Allowance for trade receivables Short Term Loan 1,500 40,000 Required: a) Prepare the Trial Balance corresponding to the above information indicating to which type of account belongs each of the accounts shown in the trial balance. (10 marks) b) Draw the journal entries corresponding to the following additional information: 1) Inventories were valued at £120,000 on 31/12/2021. 2) Clockmaker Ltd. pays £5,000 to suppliers. 3) Managers of Clockmaker Ltd. know for sure that customers will not pay £1,500. In addition, they estimate that the provision for doubtful debts needs to equal the 4% of the trade receivables final balance (after considering the trade receivables write off). 4) £500 of insurance expenses correspond to the next accounting period. 5) The company uses the straight-line method for depreciation. Buildings have a useful life of 10 years and a residual value of £10,400. 6) Clockmaker Ltd. issues 10,000 ordinary shares for a price of £1.5. 7) Corporate tax for the accounting period amounts to £2,212 and is paid on cash. Question 2 (25 marks) Considering the information in Question 1: Page 2 of 3 a) Prepare the Income Statement for Clockmaker Ltd. on 31/12/2021. (15 marks) (14 marks) b) Calculate the value of total assets from the Statement of Financial Position for Clockmaker Ltd. on 31/12/2021.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question 1 (25 marks) Clockmaker Ltd. presents the following trial balance on 31/12/2021 (accounting-year end): Value (£) Inventory (01/01/2021) 70,000 Buildings 29,400 Accumulated depreciation on Buildings 4,000 (01/01/2021) Insurance expenses 60,000 Loan interest 6,000 Trade Receivables 40,000 Capital (184,000 shares of £1 each) 184,000 Purchases 230,000 Trade Payables 30,000 Sales of goods 260,000 Cash 104,100 Long Term Loan 20,000 Allowance for trade receivables Short Term Loan 1,500 40,000 Required: a) Prepare the Trial Balance corresponding to the above information indicating to which type of account belongs each of the accounts shown in the trial balance. (10 marks) b) Draw the journal entries corresponding to the following additional information: 1) Inventories were valued at £120,000 on 31/12/2021. 2) Clockmaker Ltd. pays £5,000 to suppliers. 3) Managers of Clockmaker Ltd. know for sure that customers will not pay £1,500. In addition, they estimate that the provision for doubtful debts needs to equal the 4% of the trade receivables final balance (after considering the trade receivables write off). 4) £500 of insurance expenses correspond to the next accounting period. 5) The company uses the straight-line method for depreciation. Buildings have a useful life of 10 years and a residual value of £10,400. 6) Clockmaker Ltd. issues 10,000 ordinary shares for a price of £1.5. 7) Corporate tax for the accounting period amounts to £2,212 and is paid on cash. Question 2 (25 marks) Considering the information in Question 1: Page 2 of 3 a) Prepare the Income Statement for Clockmaker Ltd. on 31/12/2021. (15 marks) (14 marks) b) Calculate the value of total assets from the Statement of Financial Position for Clockmaker Ltd. on 31/12/2021.
Transcribed Image Text:Question 1 (25 marks) Clockmaker Ltd. presents the following trial balance on 31/12/2021 (accounting-year end): Value (£) Inventory (01/01/2021) 70,000 Buildings 29,400 Accumulated depreciation on Buildings 4,000 (01/01/2021) Insurance expenses 60,000 Loan interest 6,000 Trade Receivables 40,000 Capital (184,000 shares of £1 each) 184,000 Purchases 230,000 Trade Payables 30,000 Sales of goods 260,000 Cash 104,100 Long Term Loan 20,000 Allowance for trade receivables Short Term Loan 1,500 40,000 Required: a) Prepare the Trial Balance corresponding to the above information indicating to which type of account belongs each of the accounts shown in the trial balance. (10 marks) b) Draw the journal entries corresponding to the following additional information: 1) Inventories were valued at £120,000 on 31/12/2021. 2) Clockmaker Ltd. pays £5,000 to suppliers. 3) Managers of Clockmaker Ltd. know for sure that customers will not pay £1,500. In addition, they estimate that the provision for doubtful debts needs to equal the 4% of the trade receivables final balance (after considering the trade receivables write off). 4) £500 of insurance expenses correspond to the next accounting period. 5) The company uses the straight-line method for depreciation. Buildings have a useful life of 10 years and a residual value of £10,400. 6) Clockmaker Ltd. issues 10,000 ordinary shares for a price of £1.5. 7) Corporate tax for the accounting period amounts to £2,212 and is paid on cash. Question 2 (25 marks) Considering the information in Question 1: Page 2 of 3 a) Prepare the Income Statement for Clockmaker Ltd. on 31/12/2021. (15 marks) (14 marks) b) Calculate the value of total assets from the Statement of Financial Position for Clockmaker Ltd. on 31/12/2021.
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