Question

Question: Mr Ahmed Kumar runs a snack distribution business located in the Light Industrial area in Lusaka....

Mr Ahmed Kumar runs a snack distribution business located in the Light Industrial area in Lusaka. The following list of balances was extracted from his ledger as at 31 March, 2020; the end of his most recent financial year.

K

Capital                                                                                                83,887

Sales                                                                                                  259,870

Trade accounts payable                                                                 19,840

Returns outwards                                                                             13,407

Allowance for doubtful debts                                                          512

Discounts allowed                                                                            2,306

Discounts received                                                                          1,750

Purchases                                                                                         135,680

Returns inwards                                                                               5,624

Carriage outwards                                                                           4,562

Drawings                                                                                           18,440

Carriage inwards                                                                              11,830

Rent, rates and insurance                                                              25,973

Heating and lighting                                                                         11,010

Postage, stationery and telephone                                               2,410

Advertising                                                                                        5,980

Salaries and wages                                                                         38,521

Bad debts                                                                                          2,008

Cash in hand                                                                                    534

Cash at bank                                                                                    4,440

Inventory as at 1^st April 2019                                                         15,654

Trade accounts receivable                                                             24,500

Fixtures and fittings - at cost                                                          120,740

Prov. for depreciation on fixtures and fittings – 31/03/2020     63,020

Depreciation                                                                                     12,074

The following additional information as at 31^st March, 2020 is available:

(a) Inventory at the close of business was valued at K17,750

(b) Insurances have been prepaid by K1,120

(c) Heating and lighting is accrued by K1,360

(d) Rates have been prepaid by K5,435

(e) The allowance for doubtful debts is to be adjusted so that it is 3% of trade accounts receivable.

Required:

For the year 2020, prepare Mr Kumar’s:

Unadjusted Trial Balance as at 31^st March, 2020.

                                                                                                                              [10 Marks]

General Journal recording the adjustments highlighted above.

                                                                                                                              [10 Marks]

Trading, Profit or Loss statement for the year ended 31^st March, 2020.

[10 Marks]

Statement of financial position as at 31^st March, 2020.

                                                                                                                              [10 Marks]

[

Answer 1

Answer:

Unadjusted Trial Balance
As at March 31, 2020
Accounts	Debit (K)	Credit (K)
Capital		83,887
Sales		259,870
Trade accounts payable		19,840
Return outwards		13,407
Allowance for doubtful debts		512
Dscount allowed	2,306
Discounts received		1,750
Purchases	135,680
Returns inwards	5,624
Carriage outwards	4,562
Drawings	18,440
Carriage inwards	11,830
Rent, rates and insurance	25,973
Heating and lighting	11,010
Postage, stationery and telephone	2,410
Advertising	5,980
Salaries and wages	38,521
Bad debts	2,008
Cash in hand	534
Trade accounts receivable	24,500
Fixtures and fittings - at cost	120,740
Prov. for depreciation on fixtures and fittings – 31/03/2020		63,020
Depreciation	12,074
Inventory as at 1st April 2019	15,654
Cash at bank	4,440
Total	442,286	442,286

Accounts	Debit (K)	Credit (K)
Prepayments	1,120
Rent, rates and insurance		1,120
Heating and lighting expense	1,360
Accrued expense		1,360
Prepayments	5,435
Rent, rates and insurance		5,435
Bad debts ($24,500*3% - 512)	223
Allowance for doubtful debts		223

TRADING, PROFIT AND LOSS ACCOUNT
For the Period Ended March 31, 2020
	K	K	K
Sales			259,870
Less Sales return			5,624
Net sales			254,246
Less Cost of sales:
Opening stock		15,654
Purchases	135,680
Purchase return	13,407
	122,273
Add Carriage inwards	11,830	134,103
Cost of goods available for sale		149,757
Less Closing stock		17,750	132,007
Gross Profit			122,239
Add Discount received			1,750
			123,989
Less Expenses:
Discount allowed		2,306
Carriage outwards		4,562
Rent, rates and insurance (25,973 - 1,120 - 5,435)		19,418
Heating and lighting (11,010 + 1,360)		12,370
Postage, stationery and telephone		2,410
Advertising		5,980
Salaries and wages		38,521
Bad debts (2,008 + 223)		2,231
Depreciation		12,074	99,872
Net Profit			24,117

STATEMENT OF FINANCIAL POSITION
As at March 31, 2020
	K	K	K
FIXED ASSETS
Fixtures and fittings - at cost		120,740
Less Prov. for depreciation		63,020	57,720
CURRENT ASSETS
Cash in hand		534
Cash at bank		4,440
Inventory		17,750
Trade accounts receivable	24,500
Less Allowance for doubtful debts (512 + 223)	735	23,765
Prepayments (1,120 + 5,435)		6,555
ekkarill92 Next > < Previous Related Solutions Mr Ahmed Kumar runs a snack distribution business located in the Light Industrial area in Lusaka.... Mr Ahmed Kumar runs a snack distribution business located in the Light Industrial area in Lusaka. The following list of balances was extracted from his ledger as at 31 March, 2020; the end of his most recent financial year. K Capital                                                                                               83,887 Sales                                                                                                  259,870 Trade accounts payable                                                                 19,840 Returns outwards                                                                            13,407 Allowance for doubtful debts                                                         512 Discounts allowed                                                                           2,306 Discounts received                                                                          1,750 Purchases                                                                                         135,680 Returns inwards                                                                               5,624 Carriage outwards                                                                           4,562 Drawings                                                                                           18,440 Carriage inwards                                                                             11,830 Rent, rates and insurance                                                             25,973... Mr Ahmed Kumar runs a snack distribution business located in the Light Industrial area in Lusaka.... Mr Ahmed Kumar runs a snack distribution business located in the Light Industrial area in Lusaka. The following list of balances was extracted from his ledger as at 31 March, 2020; the end of his most recent financial year. K Capital                                                                                                83,887 Sales                                                                                                  259,870 Trade accounts payable                                                                 19,840 Returns outwards                                                                             13,407 Allowance for doubtful debts                                                          512 Discounts allowed                                                                            2,306 Discounts received                                                                          1,750 Purchases                                                                                         135,680 Returns inwards                                                                               5,624 Carriage outwards                                                                           4,562 Drawings                                                                                           18,440 Carriage inwards                                                                              11,830 Rent, rates and insurance                                                             ... 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