SECTION A

Answer One (1) Question from Section A

Question 1

Below is the trial balance of Westbury Services Ltd, year ending 31st May 2012 :

Dr Cr

£ £
Sales 425 000
Purchases 242 000
Stock (01/06/11) 145 000
Salaries 31 000
Electricity 14 000
Insurance 12 000
Returns Out 2 000
Returns In 5 000
Bad Debts 2 500
Bank 8 600
Discounts Allowed 4 000
Discounts Received 5 500
Provision for Doubtful Debtors 1 000
Debenture Interest 6 000
Interim Dividend 4 000
10 % Debenture 100 000
Investment Income 6 500
Fixed Assets at costs :
Motor Vehicles 35 000
Fixtures and Fittings 25 000
Plant and Machinery 50 000
Provision for Depreciation (01/06/11) :
Motor Vehicles 15000
Fixtures and fittings 1500
Plant and Machinery 10000
Creditors 35 200
Debtors 60 000
Profit and Loss Account (31/05/11) (7 600)
Capital 50 000

644 100 644 100

NEXT PAGE

Page 2 of 9
Additional Notes :

i) Stock (31/05/12) £ 135 000

ii) Insurance prepaid £ 4 000
iii) Electricity owing £ 6 000
iv) Provision for doubtful debtors to be 10 % of outstanding debtors (at 31/05/12)
v) Depreciation : Motor Vehicles, Reducing Balance Method 25 %
Fixtures and Fittings, Straight Line Method 10%
Plant and Machinery, Reducing Balance 25 %
vi) Investment income due £ 8 000
vii) Auditors fees owing £ 2 000
viii) Tax on profit after interest £ 25 000 to be paid in arrears
ix) Nominal value per share is £ 1.00 and the directors of the company have
declared a final dividend of £ 0.10 per share

Required :

1) Prepare the following statements for Westbury Services Ltd :

a) Income Statement for the year ending 31st May 2012

(Formerly known as the profit and loss account)

(11 marks)

b) Position Statement as at 31st May 2012

(Formerly known as the balance sheet) (11 marks)

2) Define and illustrate three (3) accounting concepts that you have used in the
preparation of the financial statements for Westbury Services Ltd.

(3 marks)

TOTAL 25 MARKS

NEXT PAGE

Page 3 of 9