Mr Marchesi has always kept his accounts on a cash basis. His new accountant has persuaded him to…

 
   

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Mr Marchesi has always kept his accounts on a cash basis. His new accountant has persuaded him to change to an accruals basis. His income and expenditure account, on a cash basis, for the year ended 31 March 20X0 is as follows:

 

£

£

Fees received

 

230,000

Rates

12,000

 

Wages

40,000

 

Insurance

6,000

 

Lighting and heating

3,000

 

Other expenses

20,000

 

 

 

81,000

 

 

£149,000

During the year Marchesi drew £110,000 from the business account to cover his private expenses. The following information is relevant:

At 1 April 19X9:

£

Debtors for fees

50,000

Balance on business bank account

4,000

Prepaid rates

3,500

Prepaid insurance

1,200

Wages payable

800

As at 31 March 20X0:

 

Debtors for fees

65,000

Prepaid rates

2,500

Prepaid insurance

1,300

Electricity payable

1,000

Wages payable

600

(Assume that there are no other assets.)

Prepare Marchesi’s profit and loss account for the year ended 31 March 20X0 and his balance sheet as at that date.