In: Accounting
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 1st 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 31st 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:
[10 Marks]
[10 Marks]
[10 Marks]
[10 Marks]
[Total: 40 Marks]
a)
Unadjusted Trial Balance | ||
For the year ending 31st Mar 2020 | ||
Accounts | Debit | Credit |
Capital | 83887 | |
Sales | 259870 | |
Trade accounts payable | 19840 | |
Return outwards | 13407 | |
Allowance for doubtful debts | 512 | |
Discounts allowed | 2306 | |
Discounts received | 1750 | |
Purchases | 135680 | |
Return inwards | 5624 | |
Carriage outwards | 4562 | |
Drawings | 18440 | |
Carriage inwards | 11830 | |
Rent, rates and insurance | 25973 | |
Heating and lighting | 11010 | |
Postage, stationary and telephone | 2410 | |
Advertising | 5980 | |
Salaries and Wages | 38521 | |
Bad debts | 2008 | |
Cash in hand | 534 | |
Cash at bank | 4440 | |
Inventory as at 1st April 2019 | 15654 | |
Trade accounts receivable | 24500 | |
Fixtures and fittings at cost | 120740 | |
Prov. For depreciation on fixtures and fittings - 31/03/2020 | 63020 | |
Depreciation | 12074 | |
Total | 442286 | 442286 |
b)
Date | Accounts | Debit | Credit | Calculation |
a | Inventory as at 31st March 2020 | 17750 | ||
P&L Account | 17750 | |||
b | Prepaid Insurance | 1120 | ||
Rent, rates and insurance | 1120 | |||
c | Heating and lighting | 1360 | ||
Heating and lighting Payable | 1360 | |||
d | Prepaid Rates | 5435 | ||
Rent, rates and insurance | 5435 | |||
e | Bad Debts | 223 | (3%*24500)-512 | |
Allowance for doubtful debts | 223 |
c)
Trading, Profit or Loss Statement | ||
For the year ending 31st Mar 2020 | ||
Accounts | Amount | |
Sales | 259870 | |
Return inwards | -5624 | |
Net Sales | 254246 | |
Cost of Goods Sold: | ||
Purchases | 135680 | |
Return outwards | -13407 | |
Carriage inwards | 11830 | |
Inventory as at 1st April 2019 | 15654 | |
Inventory as at 31st March 2020 | -17750 | |
Total Cost of Goods Sold | 132007 | |
Gross Profit | 122239 | |
Operating Expenses: | ||
Discounts allowed | 2306 | |
Carriage outwards | 4562 | |
Rent, rates and insurance | 19418 | |
Heating and lighting | 12370 | |
Postage, stationary and telephone | 2410 | |
Advertising | 5980 | |
Salaries and Wages | 38521 | |
Bad debts | 2231 | |
Depreciation | 12074 | |
Total Operating Expenses | 99872 | |
Discounts received | 1750 | |
Net Income | Gross Profit - Total Operating Expenses + Discount Received | 24117 |
d)
Statement of financial position | ||
As on 31st Mar 2020 | ||
Accounts | Amount | |
Current Assets | ||
Cash in hand | 534 | |
Cash at bank | 4440 | |
Trade accounts receivable | 24500 | |
Allowance for doubtful debts | -735 | |
Trade accounts receivable, net | 23765 | |
Inventory | 17750 | |
Prepaid Insurance | 1120 | |
Prepaid Rates | 5435 | |
Total Current Assets | 53044 | |
Non Current Assets | ||
Fixtures and fittings at cost | 120740 | |
Prov. For depreciation on fixtures and fittings - 31/03/2020 | -63020 | |
Total Non Current Assets | 57720 | |
Total Assets | 110764 | |
Current Liabilities | ||
Trade accounts payable | 19840 | |
Heating and lighting Payable | 1360 | |
Total Liabilities | 21200 | |
Capital | ||
Capital | 83887 | |
Drawings | -18440 | |
Net Income | 24117 | |
Total Capital | 89564 | |
Total Liabilities and Capital | 110764 |