On 1 January 19X1, J. Wall used his savings of £25000 to open a shop. He transferred his £25000 to a business bank account and on 2 January bought equipment for the shop for £4000 and a van for £...

On 1 January 19X1, J. Wall used his savings of £25000 to open a shop. He transferred his £25000 to a business bank account and on 2 January bought equipment for the shop for £4000 and a van for £10 000. He did not maintain proper accounts but he provides you with the following information relating to his situation on 31 December 19X1:

(a) He has a stock of goods which cost £4000

(b) Customers owed him £3000

(c) The balance on the business bank account was £15 000

(d) He owed suppliers £5000 for goods purchased.

(e) He owed £500 rent to his landlord.

(f) His rates which are £200 a month have been paid up to 31 March 19X2.

(g) It was agreed that the shop equipment should be valued at £3500 and the van at £7500.

(h) Mr Wall had withdrawn £4500 for his own use during the year

Required:

(i) Show the calculation of profit for 19X1.

(ii) Produce the accounting equation as at 31 December 19X1.

 

Nov 19, 2021
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