Question

Based on the trial balance below, prepare the Income Statement and the Balance Sheet for the year 2012.

Please show your workings for the related questions below (yes, all together!). If your final answers (below) are incorrect, I'll review your workings to grant partial credit.

Trial Balance as at 31st December 2012
	Trial Balance
	Dr		Cr
Sales			240,000
Purchases	150,000
Returns inwards	5,000
Returns outwards			6,000
Carriage Inwards	3,000
Inventory 1.1.2012	80,000
Salaries	25,000
Electricity and telephone	4,000
Rent	5,000
Bad debts	1,200
Depreciation for the year - Van	1500
Depreciation for the year - Office Computer	1000
Increase in Allowance for DD	240
Carriage Outwards	1,000
Van	12,000
Accumulated Depreciation - Van			4000
Office Computers	9,000
Accumulated Depreciation - Office Computes			4500
Accounts receivable	12,800
Allowance for doubtful debts			640
Prepayments	2,000
Bank	47,000
Accounts payable			7,000
Accrued Expenses - Salaries			3000
Capital			126,000
Drawings	31,400
	391,140		391,140
* Closing Inventory as at 31st December 2012:			36,000

Answer 1

Answer- Income Statement

Particulars	Debit	Particulars	Credit
Inventory on 1.1.2012	80,000	Sales 240,000 Less: Returns -5,000	235,000
Purchases 150,000 Less: Returns O/W -6,000	144,000	Closing Inventory	36,000
Carriage Inwards	3,000
Gross Profit	44,000
	271,000		271,000
Salaries	25,000	Gross profit	44,000
Electricity and Telephone	4,000
Rent	5,000
Bad Debts	1,200
Depreciation for the year-Van	1,500
Depreciation for the year-Office computer	1,000
Increase in Allowance for DD	240
Carriage outwards	1,000
Net Profit	5,060
	44,000		44,000

Balance Sheet

Liabilities	Amount	Assets	Amount
Capital 126,000 Less: Drawings -31,400 Add:Net Profit +5,060	99,660	Van 12,000
Accrued Expenses-Salaries	3,000	Less: Depreciation -4,000	8,000
Accounts Payable	7,000	Office Computers 9,000
		Less: Depreciation -4,500	4,500
		Accounts Receivable 12,800
		Less:Allowance for doubtful debts -640	12,160
		Prepayments	2,000
		Bank	47,000
		Closing Inventory	36,000
Total	109,660		109,660

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