The following is the statement of financial position of WW Associates as at 31 December 2016:
Statement of financial position as at 31 December 2016
£
ASSETS
Non-current assets
Machinery 25,300
Current assets
Inventories 12,200
Trade receivables 21,300
Prepaid expenses (rates) 400
Cash 8,300
Total Curent Asset 42,200
Total assets 67,500
EQUITY AND LIABILITIES
Equity
Original 25,000
Retained earnings 23,900
Total Equity 48,900
Current liabilities
Trade payables 16,900
Accrued expenses (wages) 1,700
Total Current liabilities 18,600
Total equity and liabilities 67,500
During 2017, the following transactions took place:
1 The owners withdrew equity in the form of cash of £23,000.
2 Premises were rented at an annual rental of £20,000. During the year, rent of £25,000 was paid to the owner of the premises.
3 Rates on the premises were paid during the year for the period 1 April 2017 to 31 March 2018 and amounted to £2,000.
4 Some machinery (a non-current asset), which was bought on 1 January 2016 for £13,000, has proved to be unsatisfactory. It was part-exchanged for some new machinery on 1 January 2017 and WW Associates paid a cash amount of £6,000. The new machinery would have cost £15,000 had the business bought it without the trade- in.
5 Wages totalling £23,800 were paid during the year. At the end of the year, the business owed £860 of wages.
6 Electricity bills for the four quarters of the year were paid totaling £2,700.
7 Inventories totalling £143,000 were bought on credit.
8 Inventories totalling £12,000 were bought for cash.
9 Sales revenue on credit totalled £211,000 (cost £127,000).
10 Cash sales revenue totalled £42,000 (cost £25,000).
11 Receipts from trade receivables totalled £198,000.
12 Payments to trade payables totalled £156,000.
13 Van running expenses paid totalled £17,500.
The business uses the reducing-balance method of depreciation for non-current assets at the rate of 30% each year.
Required:
Prepare :
a) a statement of financial position as at 31 December 2017
b) an income statement for the year to that date.
