Preparing Financial Statements for P Davenport

What are the steps to prepare the Statement of Profit or Loss and Statement of Financial Position for P Davenport based on the given data?

Statement of Profit or Loss:

1. Revenue Calculation: Sales revenue = Sales + Sales returns Sales revenue = $88,000 + $650 Sales revenue = $88,650

Cost of Goods Sold (COGS):

COGS = Opening inventory + Purchases - Closing inventory COGS = $1,924 + $75,390 - $2,306 COGS = $75,008

Gross Profit Calculation:

Gross Profit = Sales revenue - COGS Gross Profit = $88,650 - $75,008 Gross Profit = $13,642

Operating Expenses Determination:

Operating Expenses = Wages and salaries + Insurances + Advertising + Motor vehicle running costs + Accountancy fees + Depreciation on fixtures and fittings + Depreciation on motor vehicles Operating Expenses = $18,000 + $8,900 + $16,710 + $2,210 + $650 + $910 + $430 Operating Expenses = $47,810

Net Profit Calculation:

Net Profit = Gross Profit - Operating Expenses Net Profit = $13,642 - $47,810 Net Profit = -$34,168 (indicating a loss for the year)

Statement of Financial Position:

Assets: - Current Assets: - Bank: $3,000 - Cash in hand: $40,482 - Trade Receivable: $2,080 - Inventory: $2,306 - Non-Current Assets: - Fixtures and fittings at cost: $18,200 - Motor vehicles at cost: $10,400 Total Assets Calculation: Total Assets = Current Assets + Non-Current Assets Total Assets = $3,000 + $40,482 + $2,080 + $2,306 + $18,200 + $10,400 Total Assets = $76,468 Liabilities: - Current Liabilities: - Trade Payable: $165 - Non-Current Liabilities: - Provision for depreciation on fixtures and fittings: $910 - Provision for depreciation on motor vehicles: $1,830 - Allowance for doubtful debts: 5% of the remaining trade receivable Total Liabilities Calculation: Total Liabilities = Current Liabilities + Non-Current Liabilities Total Liabilities = $165 + $910 + $1,830 Total Liabilities = $2,905 Equity Calculation: Equity = Capital - Drawings Equity = $107,370 - $2,210 Equity = $105,160 Total Equity and Liabilities Calculation: Total Equity and Liabilities = Total Liabilities + Equity Total Equity and Liabilities = $2,905 + $105,160 Total Equity and Liabilities = $108,065 Therefore, the financial statements for P Davenport can be prepared as shown above.

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