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Microsoft Word - IA1.docx The following is the statement of financial position of Rain and Bow Ltd at the end of its first year of trading: Statement of financial position as at 31 December 2015 £ ASSETS Non-current assets Property, plant and equipment Delivery van at cost 12,000 Depreciation (2,500) 9,500 Current assets Inventories 65,000 Trade receivables 19,600 Prepaid expenses* 300 Cash 750 85,650 Total assets 95,150 EQUITY AND LIABILITIES Equity Original 50,000 Retained earnings 22,530 72,530 Current liabilities Trade payables 22,000 Accrued expenses† 620 22,620 Total equity and liabilities 95,150 * The prepaid expenses consisted of rates (£300) † The accrued expenses consisted of electricity (£620). During 2016, the following transactions took place: 1. The owners withdrew equity in the form of cash of £20,000. 2. Premises continued to be rented at an annual rental of £15,000 that was all paid to the owner of the premises. 3. Rates on the premises were paid during the year as follows: for the period 1 April 2016 to 31 March 2017 £1,300. 4. A second delivery van was bought on 1 January 2016 for £13,000. This is expected to be used in the business for four years and then to be sold for £3,000. 5. Wages totalling £36,700 were paid during the year 6. Electricity bills for the first three quarters of the year and £620 for the last quarter of the previous year were paid totalling £1,820. After 31 December 2016, but before the financial statements had been finalised for the year, the bill for the last quarter arrived showing a charge of £690. 7. Inventories totalling £67,000 were bought on credit. 7. Sales revenue on credit totalled £179,000 (cost £89,000). 8. Cash sales revenue totalled £54,000 (cost £25,000). 9. Receipts from trade receivables totalled £178,000. 10. Payments to trade payables totalled £71,000. 11. Van running expenses paid totalled £16,200. The business uses the straight-line method for depreciating non-current assets. Required: (a) Prepare a Statement of Financial Position as at 31 December 2016 and an (b) Income Statement for the year to that date.