Question

Question 1.The following balances were taken from Chico Company as at 31.12.2018                                                                                      

                                                                                                                                         [30 Marks]

Name of accounts
Cash	200 000
Creditors = Accounts Payable	100 000
Buildings	10 000
Cars	30 000
Overdraft	50 000
Debtors = Accounts receivable	10 000
Bank	400 000
Furniture	15 000
Land	10 000
Loans	200 000
Marketable Securities	10 000
Machines	15 000
Purchases	80 000
Sales	200 000
Sales Returns	10 000
Purchases Returns	20 000
Opening Stock	15 000
Rent expenses	8 000
Interest Expenses	10 000
Salaries expenses	15 000
Electricity Expenses	12 000
Phone Expenses	15 000
Utilities Expenses	8 000
Services revenues	10 000
Rent Revenues	20 000
Interest Revenues	30 000
Capital	….

Additional Information

1. Closing stock was 60 000

2. Rent expenses 2000 not paid yet

3. 3000 paid in advance

4. Salaries expenses 1500/month

5. Electricity expenses 800/ month

6. Phone expenses 16000 annually

7. Utilities expenses 7000 annually

8. Service revenues 2000/month

9. Rent revenues 2000/ month

10. Interest revenues 3000/month

Required:       

Prepare the trial balance and find Capital, [6 Marks]

Prepare Income statement According to Accrual basis [14 Marks]

Prepare Balance Sheet. [10 Marks]

Trial Balance

Name of accounts	Dr	Cr
Cash
Creditors = Accounts Payable
Buildings
Cars
Overdraft
Debtors = Accounts receivable
Bank
Furniture
Land
Loans
Marketable Securities
Machines
Purchases
Sales
Sales Returns
Purchases Returns
Opening Stock
Rent expenses
Interest Expenses
Salaries expenses
Electricity Expenses
Phone Expenses
Utilities Expenses
Services revenues
Rent Revenues
Interest Revenues
Capital

Income statement

Sales
Less: Sales Returns
Net Sales
Less: Cost of sales
Opening Stock
Purchases
Purchases Returns
Closing Stock
Gross Profit
Less:Expenses:
Add :Revenues

Balance sheet

Current Assets: Fixed Assets	Current Liabilities Long-term Liabilities Owner’s Equity

Answer 1

1. Income Statement -

Income Statement
Particulars	Amount
Sales	200,000
Less: Sales Returns	(10,000)
Net Sales	190,000
Less: Cost of sales
Opening Stock	15,000
Purchases	80,000
Less: Purchases Returns	(20,000)
Closing Stock	(60,000)
	15,000
Gross Profit	175,000
Less: Expenses
Rent expenses	10,000
Interest Expenses	7,000
Salaries expenses	18,000
Electricity Expenses	9,600
Phone Expenses	16,000
Utilities Expenses	7,000
Add: Revenues
Services revenues	(24,000)
Rent Revenues	(24,000)
Interest Revenues	(36,000)
Total Expenses/ (Income)	(16,400)
Net Income	191,400

2. Balance Sheet -

Balance Sheet
Assets	Amount	Liabilties	Amount
Current Asset		Current Liabilities
Cash	200,000	Creditors = Accounts Payable	100,000
Debtors = Accounts receivable	34,000	Overdraft	50,000
Bank	400,000	Accrued Rent	2,000
Marketable Securities	10,000	Accrued Salaries	3,000
Clsong Stock	60,000	Accrued Phone Expenses	1,000
Prepaid Interest	3,000
Prepaid Electricity Expenses	2,400
Prepaid Utilities Expenses	1,000
		Long term liabilities
Non Current Assets		Loans	200,000
Buildings	10,000
Cars	30,000	Owners Equity
Furniture	15,000	Capital	243,000
Land	10,000	Retained Earnings
Machines	15,000	Add: Net Income	191,400
	790,400		790,400

3. Trial Balance -

Trial Balance
Particulars	Debit	Credit
Cash	200,000
Debtors = Accounts receivable	34,000
Bank	400,000
Marketable Securities	10,000
Prepaid Interest	3,000
Prepaid Electricity Expenses	2,400
Prepaid Utilities Expenses	1,000
Buildings	10,000
Cars	30,000
Furniture	15,000
Land	10,000
Machines	15,000
Capital		243,000
Loans		200,000
Creditors = Accounts Payable		100,000
Overdraft		50,000
Accrued Rent		2,000
Accrued Salaries		3,000
Accrued Phone Expenses		1,000
Sales		200,000
Less: Sales Returns	10,000
Opening Stock	15,000
Purchases	80,000
Less: Purchases Returns		20,000
Rent expenses	10,000
Interest Expenses	7,000
Salaries expenses	18,000
Electricity Expenses	9,600
Phone Expenses	16,000
Utilities Expenses	7,000
Services revenues		24,000
Rent Revenues		24,000
Interest Revenues		36,000
Total	903,000	903,000