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]
Note:
Allowance for doubtful debts as per trial balance=512
Allowance as per adjustment= 24,500 × 3% = 735
Adjustment = 735 - 512 = 223