8 INCOMPLETE RECORDS
Question 3 On 01/01/2013, Tierney Ltd purchased a business for €350,000 consisting of the following tangible assets and liabilities: premises €240,000, debtors €15,000, four months premises insurance prepaid €550, trade creditors €18,000, wages due €1,500 and stock €25,000.
During 2013, Tierney Ltd did not keep a full set of accounts but was able to supply the following information on 31/12/2013:
Cash Payments:
Lodgements €80,000, General Expenses €40,000, Purchases €54,000
Bank Payments: Motor Vans €30,000, Direct Debit for Local Lotto €3,500, Creditors €36,000, Light and Heat €4,500, Interest €1,600, Furniture €20,000, Annual Insurance Premium €3,600, Rent for 12 months €4,800
Bank Lodgements: Debtors €25,000, Cash €80,000, Lotto Win €3,000
Tierney Ltd took stock worth €20 from the company on a weekly basis for household use during the year. Cash worth €25 was taken monthly for Tierney’s own personal use. Tierney Ltd borrowed €120,000 on 01/07/2013, part of which was used to purchase an adjoining premises costing €130,000. It was agreed that the sum borrowed would be repaid in 12 equal installments on 1st June each year. Interest is charged at a rate of 5% per annum on the initial sum to be paid monthly at the end of each month. Tierney Ltd rented a premises payable in advance on 01/08/2013. A quarter of the building was the private residence of their daughter. Tierney Ltd has estimated that 20% of furniture and light and heat used should be attributed to Tierney’s private use.
Included in the assets and liabilities of the company on 31/12/2013 were stock €18,000 (including stock of heating fuel €500), debtors €15,000, trade creditors €19,000, electricity due €750, cash €1200.
You are required to show, with workings, the: (a) Trading, Profit and Loss Account for the year ended 31/12/2013. (b) Balance Sheet as at 31/12/2013.
Include loan in bank account working.
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TIP
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