Question

In: Accounting

Mango Stores financial year ends on 31 December each year. On 31 December 2019, the owner...

Mango Stores financial year ends on 31 December each year. On 31 December 2019, the owner of Mango Stores needed the financial statements in order to see how the entity has performed during the current financial year. Unfortunately, the bookkeeper of Mango Stores was sick and was not able to prepare the financial statements. The following list of accounts balance was provided to you by the bookkeeper as at 31 December 2019.
Mango Stores
Trial Balance as at 31 December 2019
Capital
Land and buildings at cost
Motor Vehicles (Cost price N$40 000) Equipment (Cost price N$9 000) Long-term Investment: ABSA Bank (12%) Inventory
Accounts receivable
Cash and cash equivalents
Accounts payable
Long-term loan: 15%
Allowance for credit losses
Sales
Cost of sales
Salaries and wages
Credit losses
Insurance
Water and electricity
Advertisements
Rent income
Interest on investment
DR N$
263,240.00 28,800.00 7,290.00 50,000.00 8,880.00 11,200.00 3,700.00
165,400.00 27,000.00
550.00 2,250.00 3,500.00 2,000.00
573,810.00
CR
N$ 141,700.00
10,110.00 25,000.00
300.00 375,100.00
15,600.00 6,000.00 573,810.00
The following transactions must still be taken into account:
2

1. Thelong-termloanwasenteredintoon1July2019.Accordingtotheagreementinterest will be payable at the end of the each financial year on 31 December.
2. Advertisement includes an amount of N$400 paid for January next year.
3. Insurance amounting to N$750 was still outstanding at the end of the current financial
year.
4. MangoStoresdepreciatesallthenon-currentassetsusingthereducingbalancemethod
at a rate of 10%, Land and buildings are not depreciated. Depreciation for the current
year is yet to be accounted for.
5. Adjust the allowance for credit losses to 5% of outstanding receivables.
Required:
a) Prepare the Statement of Profit or loss of Mango Stores for the year ended 31 December 2019 (14)
b) Prepare the Statement of Financial Position of Mango Stores as at 31 December 2019.

Solutions

Expert Solution

1. Journal Entries -

Working Note -

2. Income Statement -

3. Balance Sheet -

ekkarill92 answered 2 years ago
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