O Level Accounting Topical Past Paper Solution-7707 Paper 21 May/June 2024-Q3(c) Financial Statement

In this video, I will provide a comprehensive solution to the O Level Accounting question regarding the Company Income Statement from the 7707 Paper 21 May/June 2024. I will walk you through preparing the income statement for Q Limited, using the trial balance and additional information provided.

Question Statement:
Zahra and Panya are the shareholders and directors of Q Limited. The company directors of Q Limited have provided the following trial balance.

Q Limited Trial Balance at 31 January 2024

Debit Side:
Purchases: $38,200
Rent and insurance: $10,600
Directors’ salaries: $19,000
General expenses: $3,420
Advertising: $5,400
Dividends paid: $2,500
Fittings at cost: $18,000
Inventory at 1 February 2023: $2,950
Cash at bank: $915
Debit Side Total: $100,985

Credit Side:
Revenue: $78,000
Provision for depreciation of fittings: $5,400
Trade payables: $2,288
Ordinary share capital: $13,000
Retained earnings: $2,297
Credit Side Total: $100,985

Additional Information:

1. Inventory at 31 January 2024 was valued at $4,720.
2. Depreciation on fittings is to be charged at 10% per annum using the straight-line method.
3. Payment for advertising, $75, is outstanding at 31 January 2024.
4. No dividends were outstanding at 31 January 2024.

(c) Prepare the statement of financial position for Q Limited at 31 January 2024.

In this video, I will explain how to prepare the statement of financial position and discuss the concepts of financial position in accounting. I will cover key topics such as non current assets, current assets, equity and liabilities and retained earnings, and how to adjust the outstanding expenses and accummulated depreciation while referencing relevant formats and statements.

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