Financial Statements 62

Question Description

RK Oil Plc is a supplier of oil and lubricant products to the automobile and manufacturing industries. You are the financial controller and in charge to oversee the smooth running of the financial accounting functions. Below is the one month trial balance hurriedly extracted to help with this exercise.

RK Oil Plc,

Trial Balance for 1 month 31st January, 2017.

DR CR

Office Equipment 104,500

Stock 10,000

Bank 13,850

Receivable 15,000

OSC 120,000

Retained Profit 7,550

Loan 20,000

Payables 12,000

Sales 80,000

Purchases 35,100

Director remuneration 40,000

Depreciation 500

Rent 6,000

Insurance 1,200

Wages & Salary 10,000

Printing Postages & Stationary 3,400

Balance 239,550 239,550

Additional Information:

Note A. Telephone expenses of £115 need to be accrued

B. Rent balance is prepaid for the year. The monthly rent is only £500

C. Depreciate the Equipment at 20% straight line

Required

Extract the Profit and loss account and Balance sheet. Explain the purpose of these two statements for managements.

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