The Trial Balance - Income Statement - Report Writing Accounting and Finance Assignment Help

Assignment Task:

The following additional information is also available, (ALL NUMBERS ARE IN £’000 ):
i) The closing stock at 30 April 2019 was £1,460
ii) Depreciation is to be provided on a reducing balance basis for the vehicles at 25% of net book value, and on plant & machinery at 10% of cost on a straight-line basis.
iii) The provision for doubtful debts at 30 April 2019 is to be 10% of trade receivables as at the date.
iv) The directors propose that a final Ordinary dividend of 1p per share be provided for.
v) Wages owing at the year-end were as follows: Administration £130
vi) General Admin. Expenses include £20 in respect of prepaid insurance
vii) Make provision for corporation tax for the year of £450
viii) The outstanding Debenture Interest and Preference Dividend should be provided for.
ix) Bates’ Trade Investments have earned £200 of interest that has not been received.
ix) It has been decided that £100 of the asset of Goodwill should be written off to the Income Statement

Required:
a) The book keeper has clearly made an error in drawing up the Trial Balance. She has put one of the balances in the wrong column. Which balance has been entered incorrectly? 5 marks

b) You are required to prepare an Income Statement for the year ended 30 th April 2019 and a Balance sheet at that date. 10 marks

c) An old school friend of yours is starting the BABS programme in September 2020. Needless to say he ius concerned about the unusual circumstances and has asked for your advice. He has seen exam questions like these and has asked the questions below. In each case give him an answer that, as a future undergraduate he would understand and will give him comfort to alleviate some of his concerns:

a) When you Google DEBIT and CREDIT, it basically says that DEBIT is bad and CREDIT is good. So, in this example Trade payables, what the business owes it’s suppliers, is in the CREDIT column. Surely it’s not good to owe people money? 5 marks
b) What does Goodwill mean? It sounds like a good thing, why is it the DEBIT column which I thought was bad things? 5 marks
c) I can see that Bad Debts are customers that have not paid the business and should be written off as a cost. But what is the Provision for Bad debts? 5 marks
d) I know that certain things a business has will go down in value over time. I have heard that cars, for instance, depreciate very quickly. But how can we know by how much, and when? Also, why are there at least two different methods of calculating it, it all sounds very vague?

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