Question

The trial balance and additional information were extracted from the accounting records of Princess Traders on 28 February 2019, the end of the financial year

PRE-ADJUSTMENT TRIAL BALANCE ON 28 FEBRUARY 2019

Statement of Financial Position accounts section

	Debit($)	Credit($)
Capital		375 000
Drawings	30 000
Land and building	285 000
Vehicle at cost	210 000
Equipment at cost	150 000
Accumulated Depreciation on Vehicle		120 000
Accumulated Depreciation on Equipment		84 000
Fixed deposit: Ben Bank (9% p.a)	45 000
Trading inventory	38 655
Accounts receivable	44 400
Allowance for credit losses		2 250
Bank	18 545
Cash float	2 200
Accounts payable		41 670
Mortgage loan: Ben Bank (15% p.a)		75 000
Nominal accounts section
Sales		471 975
Cost of sales	135 000
Sales returns	6 000
Salaries and wages	130 500
Credit losses	4 200
Stationery	6 840
Rates and taxes	17 850
Motor expenses	30 000
Repairs	5 385
Telephone	10 155
Electricity and water	15 185
Bank charges	1 885
Insurance	19 470
Interest on mortgage loan	6 000
Interest on fixed deposit		3 375
Rent income		39 000
Totals	1 212 270	1 212 270

Adjustments and additional information

1 The following items were on hand at the financial year end according to physical count:

     Trade inventory $ 37 055

     Stationery $ 260

2. Rent has been received for the period 01 March 2018 to 31 March 2019.

3. Provide for outstanding interest on fixed deposit. The investment in fixed deposit was made on 01 December 2015 and it matures on 30 November 2019.

4. An amount of $ 5 250 is owing for interest on loan.

5. Write off the account of debtor , B. Lee who owed $400.

6. Adjust the allowance for credit losses to 5% of accounts receivable.

7. Rates and taxes account includes a payment of $12 000 made to the municipality for the period 01 July 2018 to 30 June 2019.

8. Repairs to the building , $5 000 was erroneously debited to Land and Building account.

9. The proprietor used $250 form the cash float to purchase personal items for herself. No entry was made for this transaction.

10. Provide for depreciation as follows:

10.1 On equipment at 10% p.a using the fixed instalment method. Note: Equipment cost price $20 000, was purchased on 01 September 2018. The purchase has been recorded. on vehicles at 20% p.a on the diminishing balance.

10.2 On vehicles at 20% p.a on the diminishing balance.

Required

Use the trial balance and additional information to prepare:

Question 1

The Statement of profit and loss account for the year ended 28 February 2019

Question 2

Extract of statement of financial position on 28 February 2019

Answer 1

		PRE ADJUSTED			ADJUSTMENTS
	Account	Debit	Credit		Ref	Account	Debit	Credit
	Capital		375,000
	Drawings	30,000			9	Drawings	250
	Land and building	285,000			8	Land and building		5000
	Vehicle at cost	210,000
	Equipment at cost	150,000
	Accumulated Depreciation on Vehicle		120,000			Accumulated Depreciation on Vehicle		18,000
	Accumulated Depreciation on Equipment		84,000		10.1	Accumulated Depreciation on Equipment		1,000	(20000*0.1*(1/2))
	Fixed deposit: Ben Bank (9% p.a)	45,000
	Trading inventory	38,655			1	Trading inventory		1,600	(38655-37055)
	Accounts receivable	44,400			5	Accounts receivable		400
	Allowance for credit losses		2,250		6	Allowance for credit losses	50
	Bank	18,545
	Cash float	2,200			9	Cash float		250
	Accounts payable		41,670
	Mortgage loan: Ben Bank (15% p.a)		75,000
	Nominal accounts section
	Sales		471,975
	Cost of sales	135,000
	Sales returns	6,000
	Salaries and wages	130,500
	Credit losses	4,200
	Stationery	6,840			1	Stationery		260
	Rates and taxes	17,850			7	Rates and taxes		5950	(17850*(4/12)
	Motor expenses	30,000
	Repairs	5,385			8	Repairs	5000
	Telephone	10,155
	Electricity and water	15,185
	Bank charges	1,885
	Insurance	19,470
	Interest on mortgage loan	6,000			4	Interest on mortgage loan	5250
	Interest on fixed deposit		3,375		3	Interest on fixed deposit		1013	(45000*0.09*(3/12)
	Rent income		39,000		2	Rent income	39,000
	Totals	1,212,270	1,212,270		1	Loss of trading inventory	1,600
					1	Stationary Inventory	260
					2	Rent Received in Advance		39,000
					3	Interest receivable onfixed deposit	1013
	Accounts Receivable	44,000	(44400-400)		4	Interest Payable		5250
	Allowance for credit losses(5%)	2,200			5 ,6	Bad debt expense	400	50
	Existing Allowance	2,250			7	Prepaid Expense	5950
	Adjustment Required	50			10.1	Depreciation-Equipment	1,000
					10.2	Depreciation-Vehicle	18,000
	Depreciation on Vehicles					TOTAL ADJUTMENTS	77773	77773