Question

In: Accounting

Question 5 a) Jamie operates as a sole trader. He has extracted the following data from...

Question 5

a) Jamie operates as a sole trader.

He has extracted the following data from his books of account. Financial data extracts for the year ended 31st January 2019.

6

Sales

Purchases Opening Inventory Closing Inventory

REQUIRED

£ 140 000

100 000 40 000 20 000

Prepare Jamie’s Trading Account for the year ended 31st January 2019. Clearly show the value of Cost of Sales and Gross Profit.

b) Explain the difference between the straight-line method and the reducing 4 balance method of depreciation.

Expert Solution

Solution 5a:-

Jamie's Trading Account

(for year ended 31st January,2019)

Discription	£	£
Sales		140000
Cost of Sales :-
Opening inventory	40000
Add:- Purchase	100000
	140000
Less: - Closing inventory	20000
Cost of sales	120000	120000
Gross profit		20000

Solution b :-

Difference between Straight line method and Reducing Balance method of Depreciation

Base	Straight line method	Reducing Balance method
Assets cost	Depreciation are calculated on Book value of asset for each year	Depreciation are calculated on current value ( value after deducting previous year Depreciation) of assets for each year
Depreciation Amount	The depreciation amount remains same each year	The Depreciation amount reduce by each year from previous one
Ending value	The ending value of asset will be zero or scrap at end of useful life	The ending value of assets will be non zero at end of useful life .
Combined cost	Combined cost of depreciation and repair decreasing trend	Combined cost of depreciation and repair coulb be ramains more ,less or equal throughout the period

ekkarill92 answered 2 years ago

A- Tracy Underhill operates as a sole trader. Below is a trial balance extracted from her...

A- Tracy Underhill operates as a sole trader. Below is a trial balance extracted from her books as at 31 December 2017. Trial balance for Tracy Underhill as at 31 December 2017 Debit Credit £ _ . £ Sales revenue 695,000 Inventory (as at 1 January 2017) 105,800 Purchases 625,200 Non-current assets at cost: Equipment 100,000 Motor vehicle 80,000 Accumulated depreciation: Equipment 10,000 Motor vehicle 10,000 Insurance 14,700 Rent 30,000 Heating and lighting 10,000 Salaries and wages...

Question 1 The following balances have been extracted from the accounts of Peya, a sole trader,...

Question 1 The following balances have been extracted from the accounts of Peya, a sole trader, for the period ended 31 March 2020. N$ Sales 427,726 Carriage inwards 476 Wages and salaries 64,210 Carriage outwards 829 Purchases 302,419 Rent and rates 12,466 Heat and light 4,757 Stock at 1 April 2019 15,310 Drawings 21,600 Equipment at cost 102,000 Motor vehicles at cost 43,270 Provision for depreciation – equipment 22,250 – motor vehicles 8,920 Debtors 50,633 Creditors 41,792 Bank 3,295 cr...

The following trial balance was extracted from the books of Al Mawaleh Traders, sole trader as...

The following trial balance was extracted from the books of Al Mawaleh Traders, sole trader as at 31 May 2018. Trial balance as at 31 May 2018 Particulars Debit Credit $ $ Capital 51,960 Drawings 4,080 Buildings at cost 53,000 Receivables and Payables 8,600 6,000 Opening Inventory 11,300 Salaries 5,080 Freight In 2,390 Freight Out 2,140 Insurance 2,790 Purchases and sales 97,600 140,385 Returns 980 1,640 Selling Expenses 1,440 Bad debts 541 Discount Received 960 Equipment at cost 8,000 Furniture...

Joe Wright, a sole trader, extracted the following trial balance from his books at the close...

Joe Wright, a sole trader, extracted the following trial balance from his books at the close of business on 31st March 2006. GH¢ GH¢ Sales 400,000 Purchases 350,000 Sales returns 5,000 Purchases returns 6,200 Opening stock at 1st January 2006 100,000 Provision for doubtful debts 800 Wages and salaries 30,000 Rates 6,000 Telephone 1,000 Shop fittings at cost 40,000 Van at cost 30,000 Debtors and creditors 9,800 7,000 Bad debts 200 Capital 179,000 Bank balance 3,000 Drawings 18,000 593,000 593,000...

“The following balances were taken from Jane's books who is a sole trader and operates a...

“The following balances were taken from Jane's books who is a sole trader and operates a catering business. Jane's trial balance for the year to 30th June 2019 was as follows: Trial Balance Dr (£) Cr (£) Equipment at cost 42,000 Accumulated depreciation of equipment as at 1st July 2018 35,000 Inventory as at 1st July 2018 50,800 Debtors 32,000 Bank / cash 112,678 Creditors 23,027 Provision for doubtful debts as at 1st July 2018 1,280 Long term...

Question 1 (40 marks) A- Tracy Underhill operates as a sole trader. Below is a trial...

Question 1 A- Tracy Underhill operates as a sole trader. Below is a trial balance extracted from her books as at 31 December 2017. Trial balance for Tracy Underhill as at 31 December 2017 Debit Credit £ _ . £ Sales revenue 695,000 Inventory (as at 1 January 2017) 105,800 Purchases 625,200 Non-current assets at cost: Equipment 100,000 Motor vehicle 80,000 Accumulated depreciation: Equipment 10,000 Motor vehicle 10,000 Insurance 14,700 Rent 30,000 Heating and lighting 10,000 Salaries...

Mr Modisa, sole trader, extracted the following trail balance off the books. Trial Balance as at...

Mr Modisa, sole trader, extracted the following trail balance off the books. Trial Balance as at 31 December 2019 Pula Pula Sales 135,000.00 Purchases 67,500.00 Carriage inwards 2,300.00 Returns Inwards 3,200.00 Returns Outwards 2,400.00 Drawings 19,600.00 Capital 44,800.00 Rent 7,000.00 Discount Allowed 2,400.00 Advertising 600.00 Salaries & wages 42,000.00 Provision for doubtful debts 600.00 Accounts Receivable 12,500.00 Accounts Payable 10,400.00 Cash in hand 500 Cash at...

Financial Accounting II question Wanabidii is a sole trader in a local market. He made a...

Financial Accounting II question Wanabidii is a sole trader in a local market. He made a mistake while taking stock at the end of year 2017 and 2018. In the year 2017 the stock had been undervalued by ksh 90 000 and overvalued by ksh 270 000 in 2018. The following figures were extracted using the above stated valuations (All figures are in khs. ‘000’ Year 2 017 2 018 2 019 Opening inventory 900 1 800 ...

Question 1 (7 marks) (This question is from the Week 1 Tutorial) James, a sole trader,...

Question 1 (This question is from the Week 1 Tutorial) James, a sole trader, is considering registering his business as a company. James wants to establish limited liability for himself as a director, shareholder, and employee of the company. Advise James on the following questions a) and b) as stated below: a) Does the creation of a company absolutely remove him from any potential liability for injury, loss, or contracts made by his company? (3.5 marks) b) Would James need...

QUESTION 5: The following information has been extracted from the financial statements of YDI Limited: Extract...

QUESTION 5: The following information has been extracted from the financial statements of YDI Limited: Extract of Statement of Comprehensive Income for the year ended 31 December: 2019 2018 $ $ Sales 2 000 000 1 600 000 Cost of sales 940 000 800 000 Operating profit 600 000 520 000 Profit before tax 520 000 450 000 Profit after tax 364 000 315 000 Extract of Statement of Financial Position as at 31 December: Assets 2019 2018...