Question

In: Accounting

“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 loan (at 10% per annum)

50,000

Owners capital

30,640

Retained profits as at 1st July 2018

62,901

Sales

353,800

Purchases

185,000

Motor expenses

34,890

Loan interest (all relating to long term loan)

2,500

Insurance

56,790

Rent

24,500

Office expenses

14,890

Bad debts written off

600

Totals

556,648

556,648

                   

Additional information                                                                                                             

  1. The stock/inventory as at 30th June 2019 originally cost £36,000. However, the estimated net realisable value is calculated at £35,200.                                                                                                        
  2. A motor vehicle repair carried out in September 2018 costing £400 was still unpaid at the end of the year.                                                                                               
  3. Insurance prepaid as at 30th June 2019 was £1500.                                                                                                    
  4. Rent owing as at 30th June 2019 were £2050.                                                                                                    
  5. Increase the provision for doubtful debts to 6% of debtors.                                                                                                    
  6. Depreciation on equipment is to be taken at 25% on a reducing balance basis.”                                                                                                                                                                                       

Required

  1. Prepare Jane's income statement for the year ending 30th June 2019 and a statement of financial position as at 30th June 2019.

Solutions

Expert Solution

JANE

INCOME STATEMENT

FOR THE YEAR ENDING AT 30 JUNE 2019

PARTICULARS        AMOUNT ( IN £  )

Sales 353800   

TOTAL INCOME 353800

Purchases 185000

Changes in Stock ( 50800 - 35200 ) 15600

Motor expenses 34890

Loan Interest 2500

Insurance ( 56790 - 1500 ) 55290

Rent ( 24500 + 2050 ) 26550

Office Expenses 14890

Bad Debts Written off ( 32000 * 6%) 1920

Depreciation ( 7000 * 25%) 1750

TOTAL EXPENSES 338390

NET PROFIT 15410

JANE

STATEMENT OF FINANCIAL POSITION

AS ON 30 JUNE 2019

  PARTICULARS        AMOUNT ( IN £  )

Equipment at cost    42000

Less: Accumulated Depreciation (36750) 5250

Inventory as at 30 June 2019 (Lower of Cost or NRV) 35200

Debtors     32000

Bank / Cash 112678

Prepaid Insurance 1500

TOTAL ASSETS 186628

Owners Capital 30640

Retained Profit as at 30 June 2019 ( 62901+ 15410 ) 77311

Creditors 23027

Provision for doubtful debts as at 30 June 2019 ( 1280 + 1920 ) 3200

Long term Loan 50000

Outstanding Rent 2050

Outstanding for motor vehicle repair 400  

TOTAL LIABILITIES 186628

  

  


Related Solutions

The following balances were taken from the books of Sheffield Corp. on December 31, 2017. Interest...
The following balances were taken from the books of Sheffield Corp. on December 31, 2017. Interest revenue $87,000 Accumulated depreciation—equipment $41,000 Cash 52,000 Accumulated depreciation—buildings 29,000 Sales revenue 1,381,000 Notes receivable 156,000 Accounts receivable 151,000 Selling expenses 195,000 Prepaid insurance 21,000 Accounts payable 171,000 Sales returns and allowances 151,000 Bonds payable 101,000 Allowance for doubtful accounts 8,000 Administrative and general expenses 98,000 Sales discounts 46,000 Accrued liabilities 33,000 Land 101,000 Interest expense 61,000 Equipment 201,000 Notes payable 101,000 Buildings 141,000...
The following balances were taken from the books of Oriole Corp. on December 31, 2020. Interest...
The following balances were taken from the books of Oriole Corp. on December 31, 2020. Interest revenue $87,950 Accumulated depreciation—equipment $41,950 Cash 52,950 Accumulated depreciation—buildings 29,950 Sales revenue 1,381,950 Notes receivable 156,950 Accounts receivable 151,950 Selling expenses 195,950 Prepaid insurance 21,950 Accounts payable 171,950 Sales returns and allowances 151,950 Bonds payable 101,950 Allowance for doubtful accounts 8,950 Administrative and general expenses 98,950 Sales discounts 46,950 Accrued liabilities 33,950 Land 101,950 Interest expense 61,950 Equipment 201,950 Notes payable 101,950 Buildings 141,950...
The following balances were taken from the books of Shamrock Corp. on December 31, 2017. Interest...
The following balances were taken from the books of Shamrock Corp. on December 31, 2017. Interest revenue $87,050 Accumulated depreciation—equipment $41,050 Cash 52,050 Accumulated depreciation—buildings 29,050 Sales revenue 1,381,050 Notes receivable 156,050 Accounts receivable 151,050 Selling expenses 195,050 Prepaid insurance 21,050 Accounts payable 171,050 Sales returns and allowances 151,050 Bonds payable 101,050 Allowance for doubtful accounts 8,050 Administrative and general expenses 98,050 Sales discounts 46,050 Accrued liabilities 33,050 Land 101,050 Interest expense 61,050 Equipment 201,050 Notes payable 101,050 Buildings 141,050...
The following balances were taken from the books of Alonzo Corp. on December 31, 2017. Interest...
The following balances were taken from the books of Alonzo Corp. on December 31, 2017. Interest revenue $86,000 Accumulated depreciation—equipment $40,000 Cash 51,000 Accumulated depreciation—buildings 28,000 Sales revenue 1,380,000 Notes receivable 155,000 Accounts receivable 150,000 Selling expenses 194,000 Prepaid insurance 20,000 Accounts payable 170,000 Sales returns and allowances 150,000 Bonds payable 100,000 Allowance for doubtful accounts 7,000 Administrative and general expenses 97,000 Sales discounts 45,000 Accrued liabilities 32,000 Land 100,000 Interest expense 60,000 Equipment 200,000 Notes payable 100,000 Buildings 140,000...
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...
John Hanning owns a small hotel. The following balances were taken from his books on 31...
John Hanning owns a small hotel. The following balances were taken from his books on 31 December 2016 Takings (Sales) Premises, at Cost Fixtures and Fittings at cost Minibus Provision for depreciation, 1 January 2016: Fixtures and fittings Minibus Stock of wine, 1 January 2016 Debtors Creditors Bank overdraft Cash in hand Wages Cleaning Purchase of food and wine Running expenses of minibus Bank interest (Dr Balance) Advertising General expenses Capital Drawings $ 283,670.00 396,000.00 100,000.00 10,000.00 45,600.00 3,600.00 1,200.00...
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...
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...
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...
QUESTION THREE [20] The following list of balances was taken from the books of Orange Traders,...
QUESTION THREE [20] The following list of balances was taken from the books of Orange Traders, a fruit and vegetable distributor as at 28 FEBRUARY 2019, the end of the financial year: Capital 60500 Drawings 3 400 Loan: NRB 70 000 Inventory: 1 March 2018 13 760 Provision for bad debts 150 Sales 250620 Purchases 116040 Sales returns 250 Purchases returns 1 150 Rent income 10 500 Salaries and wages 77 500 Railage on sales 1 600 Interest on loan...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT