Prepare income statement for the year ended 31 December 20X7 and statement of financial position as at that date.

Here's the preparation of the Income Statement and Statement of Financial Position for Shon Black. All figures are in K'000. Adjustments Calculation: 1. Closing Inventory (a): K1,660 2. Bad Debts (b): Bad debts written off: K6 Increase in allowance: K30 (new) - K18 (old) = K12 Total Bad Debts Expense: 6 + 12 = K18 Adjusted Trade Receivables: K810 (original) - K6 (written off) = K804 3. Salaries and Wages (c): Accrued: K190 (add to expense, current liability) Prepaid: K70 (deduct from expense, current asset) Adjusted Salaries and Wages Expense: K1,590 + K190 - K70 = K1,710 4. Distribution Expenses (d): Prepaid: K60 (deduct from expense, current asset) Accrued: K120 (add to expense, current liability) Adjusted Distribution Expenses: K1,460 - K60 + K120 = K1,520 5. Interest (e): Accrued: K50 (add to expense, current liability) Adjusted Interest Expense: K50 (paid) + K50 (accrued) = K100 6. Purchases (f): Accrued: K18 (add to purchases, add to trade payables) Adjusted Purchases: K8,100 + K18 = K8,118 Adjusted Trade Payables: K820 + K18 = K838 7. Sales (g): Accrued: K7 (add to sales, add to trade receivables) Adjusted Sales: K13,600 + K7 = K13,607 Adjusted Trade Receivables (after bad debts and this adjustment): K810 - K6 + K7 = K811 8. Depreciation (h): Buildings: 2\% × K8,300 = K166 Warehouse: 1.5\% × K1,800 = K27 Motor Vehicles: 25\% × K1,680 = K420 Total Depreciation Expense: 166 + 27 + 420 = K613 a) Prepare income statement for the year ended 31 December 20X7 Shon Black \\ Income Statement \\ For the year ended 31 December 20X7 l r r Sales (K13,600 + K7) & & 13,607 \\ Less: Returns Inwards & & (400) \\ Net Sales & & 13,207 \\ Less: Cost of Goods Sold & & \\ Opening Inventory & 1,530 & \\ Purchases (K8,100 + K18) & 8,118 & \\ Add: Carriage Inwards & 700 & \\ Less: Returns Outwards & (150) & \\ Net Purchases & 8,668 & \\ Cost of Goods Available for Sale & 10,198 & \\ Less: Closing Inventory & (1,660) & \\ Cost of Goods Sold & & (8,538) \\ Gross Profit & & 4,669 \\ Add: Other Income & & \\ Discounts Received & & 100 \\ Less: Expenses & & \\ Distribution Expenses (K1,460 - K60 + K120) & 1,520 & \\ Salaries and Wages (K1,590 + K190 - K70) & 1,710 & \\ Interest on Loan (K50 + K50) & 100 & \\ Discounts Allowed & 80 & \\ Carriage Outwards & 250 & \\ Bad Debts Expense (K6 + K12) & 18 & \\ Depreciation (K166 + K27 + K420) & 613 & \\ Total Expenses & & (4,291) \\ Net Profit & & 478 \\ b) Prepare statement of financial position as at 31 December 20X7 Shon Black \\ Statement of Financial Position \\ As at 31 December 20X7 l r r ASSETS & & \\ Non-Current Assets & & \\ Land at cost & 1,510 & \\ Buildings at cost & 8,300 & \\ Less: Accumulated Depreciation (K1,020 + K166) & (1,186) & 7,114 \\ Warehouse at cost & 1,800 & \\ Less: Accumulated Depreciation (K290 + K27) & (317) & 1,483 \\ Motor Vehicles at cost & 1,680 & \\ Less: Accumulated Depreciation (K620 + K420) & (1,040) & 640 \\ Total Non-Current Assets & & 10,747 \\ & & \\ Current Assets & & \\ Inventory (Closing) & 1,660 & \\ Trade Receivables (K810 - K6 + K7) & 811 & \\ Less: Allowance for Doubtful Debts & (30) & 781 \\ Cash at Bank & 140 & \\ Prepaid Expenses (Salaries K70 + Distribution K60) & 130 & \\ Total Current Assets & & 2,711 \\ TOTAL ASSETS & & 13,458 \\ & & \\ EQUITY AND LIABILITIES & & \\ Equity & & \\ Capital 1 January 20X7 & 10,782 & \\ Add: Net Profit & 478 & \\ Closing Capital & & 11,260 \\ & & \\ Non-Current Liabilities & & \\ 10% Loan & & 1,000 \\ & & \\ Current Liabilities & & \\ Trade Payables (K820 + K18) & 838 & \\ Accrued Expenses (Salaries K190 + Distribution K120 + Interest K50) & 360 & \\ Total Current Liabilities & & 1,198 \\ TOTAL EQUITY AND LIABILITIES & & 13,458 \\ That's the last one for today! Send me the next one 📸