Question

The following information are the balances extracted from the books of Xxx for the year ended 31 December 2017:
accounts                  dr                        cr
opening stock        8000
buildings                 15000
debitors                  4000
purchases               22000
salaries                    1200
sales                                                   36000
discount                  800
sales returns          1000
furniture                 3000
office exp               300
wages                      600
purchase returns                               600
interest                                                  500
travelling exp         400
insurance                 600
machinery              8000
carriage on purchases 800
commission           600
cash in hand          1400
rent and rates         2400
capital                                                   25000
creditors                                                8000
totals                      70100                   70100

Adjustments need to be made:
1. closing stock was valued at $9000.
2. office exp $2000 and wages 300 are outstanding.
3.depreciate building by 2%, machinery by 10% and furniture by 20%
4. prepaid insurance $100

Required:
1.Prepare Trading & Profit and Loss account for the year ended 31 December 2017.
2. Balance sheet as on 31 December 2017

Answer 1

Trading and Profit and Loss Account
For the year ended 31st December, 2017
To Opening stock		8,000	By Sales	36000
To Purchases	22,000		Less: Sales Return	1000
Less: Purchase Return	600	21,400	Less: Sales Discount	800	34200
To Carriage inwards		800	By Closing stock		9000
To Wages	600
Add: Outstanding wages	300	900
To Gross profit c/d		12,100
		43,200			43200
To Salaries	1200		By Gross profit b/d	12,100
To Rent and rates	2400		By Interest on Capital	500
To travelling exp.	400
To Insurance (600 - 100)	500
To office  expenses (300+2000)	2300
To Commission	600
To Depreciation (15000 x 2%)+($8000 x 10% )+(3000 x 20%)	1700
To Net profit transferred to capital a/c	3,500
	12600			12,600
X & Co.
Balance Sheet
As at 31st December, 2017
Assets	Amount	Liabilities		Amount
Cash in hand	1400	Creditors		8,000
Machinery = 8000 - 800	7,200	Outstanding office exp.		2,000
Building	14,700	Outstanding wages		300
Furniture	2,400	Capital	25,000
Prepaid insurance	100	Add Net profit	3,500	28,500
Stock	9,000
Sundry debtors	4000
Total Assets	38,800	Total Liabilities and Capital		38,800