Mr and Mrs Evgeni run a private company, Evgeni Gifts Ltd, selling gifts and Jewellery items from the Far-East. Mr Evgeni has asked you to prepare set of financial statement for the year ended 31 December 2021 as soon as possible. The company’s accountant had to take time off due to health issues. The following balances have been extracted from the records of the company for the year ended 31 December 2021.
Audit and Accountancy 1,100
Advertising 1,000
Bank 1,750
Creditors 9,200
Long Term Bank Loan 2,900
Debtors 43,250
Directors remuneration 52,000
Electricity 3,200
Insurance 1,950
Fixtures and Fittings
At Cost 120,000
Accumulated depreciation (at 1.1.2021) 45,000
Motor Vehicle
At Cost 48,000
Accumulated depreciation (at 1.1.2021) – 2,650
Office expenses 6,300
Ordinary £1 shares (issued and fully paid) 25,000
Profit and loss account (at 1.1.2021) 26,075
Purchases 195,000
Rent and rates 8,200
Sales – 410,000
Stock (at 1.1.2021) 15,200
Wages and salaries 23,500
Bank Interest 375
£520,825 £520,825
Additional Information:
1. Stock at 31st December 2021 valued at cost amounted to £22,500.
2. Depreciation is to be provided on fixtures and fittings at 20% on cost, and at 10% on reducing balance method for motor vehicle.
3. Provision is to be made for electricity for £725.
4. Insurance paid in advance at 31st December 2021 was £525.
Required
1. Prepare Income statement for the year ended 31st December 2021. (10Marks)
2. Prepare Balance Sheet as at 31st December 2021. (15 Marks)
3. Identify FIVE accounting concepts that have been applied in the preparation of financial Statements and explain their meaning. (10 Marks)
