In: Accounting
Q1
The following trial balance was extracted from the books of ABC Store on 31 December 20x5.
DR |
CR |
|
$ |
$ |
|
Sales |
223,940 |
|
Returns inwards |
1, 900 |
|
Returns outwards |
970 |
|
Discount allowed |
800 |
|
Discount received |
2,970 |
|
Purchases |
80,100 |
|
Stock |
56,000 |
|
Rent and rates |
60,500 |
|
Electricity |
5,800 |
|
Debtors |
45,700 |
|
Creditors |
29,750 |
|
Bank |
110,450 |
|
Motor vehicle at cost |
100,000 |
|
Accumulated depreciation for motor vehicle |
30,000 |
|
Provision for doubtful debts |
5,420 |
|
Other expenses |
7,500 |
|
Capital |
185,200 |
|
Drawings |
9,500 |
________ |
478,250 |
478,250 |
The following additional information is provided:
1. Rent of $5,000 is prepaid.
2. Electricity of $650 and other expenses of $780 are accrued.
3. The depreciation charge for motor vehicle for the year is $10,000.
4. The proprietor took $12,000 cash and $1,000 worth of goods for own use. No entry was made in the books in respect of this.
5. The closing stock is $12,000.
6. Bad debts of $9,550 are to be written off.
7. A provision for doubtful debts of 10% is to be made on the remaining debtors’ balance.
Required:
Prepare the income statement of ABC Store for the year to 31 December 20x5 and the balance sheetas at that date.
Answer; | ||||
Income statement of ABC store fir the year ended 31 december 20#5 | ||||
Revenues: | ||||
Sales revenue | 223940 | |||
Less: sales returns | ||||
return inwards | 1900 | |||
discount allowed | 800 | |||
Total revenues | 221240 | |||
Cost of goods sold | ||||
opening stock | 56000 | |||
Add: purchases(80100-970-2970) | 76160 | |||
less: closing stock | 12000 | 120160 | ||
Gross Profit | 101080 | |||
Expenses | ||||
rent and rates(60500-5000) | 55500 | |||
electricity(5800+650) | 6450 | |||
depreciation | 10000 | |||
other expenses(7500+780) | 8280 | |||
provision for doubt full debts | 4570 | |||
Total expenses | 84800 | |||
Net income before taxes | 16280 | |||
less: taxes | 0 | |||
Net income | 16280 | |||
Balance sheet of ABC stores | ||||
Liabilities | Amt | Assets | Amt | |
capital | 185200 | cash | ||
less: Drawings | 9500 | bank | 110450 | |
net profit | 16280 | debtors(45700-5420-4570) | 35710 | |
crerditors | 29750 | stock | 12000 | |
Accrued expenses(650+780) | 1430 | motor vehicle(100000-40000) | 60000 | |
prepaid rent | 5000 | |||
223160 | 223160 | |||