Task 1:
The following list of balances has been extracted from the books of Danny Ltd.
Accounts payable £16,120
Accounts receivable £16,480
Carriage inwards £2,440
Computer equipment at cost £10,000
Carriage outwards £4,000
Drawings £6,500
Electricity £7,000
Loan interest £480
Provisions for doubtful debt £1,000
Insurance £1,500
Motor vehicles at cost £51,200
Capital £84,760
Opening inventory £3,600
Accumulated depreciation –motor vehicles £9,200
Petty cash £40
Bank £59,120
Purchases £26,400
Rent £5,600
Sales £60,600
Telephone £4,320
Insurance £27,000
The following information is also available:
i.The value of inventory as at 31stDecember 2019 was £10,200
ii.Motor vehicles are to be depreciated at 20% on reducing balance basis and computer equipment at 10% on cost.
iii. An electricity bill for £1,000 for the last three months to 31stDecember 2019 did not arrive early, so this is yet to be reflected in the books
- Of the insurance payments, £500is for the year ending 31stDecember 2020.
- Unpaid taxes for the period amount to £1,920
Required:
- a) Complete the Journal entries required to reflect the above additional information
- b) Draw up an updated Trial balance
- c) Complete the financial statements: Statement of Profit or Loss and Statement of Financial position, for Danny Ltd for the year ending 31stDecember 2019.
Task 2:
A primary objective of financial reporting is to keep the users of financial statements informed about the performance of a business overtime. Business managers are primary users of accounting information/ financial reports.
Critically assess the relevance of financial literacy to business managers (maximum word limit :1000)
