The following trial balance has been extracted from the ledger of Mr You, a sole trader.
ACCOUNT | DEBIT | CREDIT |
SALES | 200,000 | |
PURCHASES | 130,000 | |
CARRIAGE | 3,920 | |
DRAWINGS | 536 | |
RENT AND INSURANCE | 27,120 | |
POSTAGE AND STATIONERY | 1,350 | |
ADVERTISING | 320 | |
SALARIES AND WAGES | 4,515 | |
IRRECOVERABLE DEBTS | 335 | |
ALLOWANCE FOR RECEIVABLES | 336 | |
RECEIVABLES | 13,500 | |
PAYABLES | 12,150 | |
CASH ON HAND | 414 | |
CASH AT BANK | 261 | |
INVENTORY AS AT 1 JUNE 20X5 | 3,920 | |
EQUIPMENT AT COST | 80,000 | |
ACCUMULATED DEPRECIATION | 16,000 | |
CAPITAL | 37,705 | |
266,191 | 266,191 |
The following additional information as at 31 May 20X6 is available.
1. Rent is accrued by $4,500.
2. Insurance has been prepaid by $3,960.
3. Closing inventory has been counted and is valued at $4,704.
4. $784 of carriage represents carriage inwards on purchases.
5. The allowance for receivables is to be increased by $207.
6. Equipment is to be depreciated at 15% per annum using the straight-line method.
Required
1. Prepare a statement of profit or loss for the year ended 31 May 20X6.
2. Prepare a statement of financial position as at that date.
Suggested solutions:
Working:
1. Rent is accrued by $4,500.
Debit Rent and insurance expenses and Credit Accrual $4,500.
2. Insurance has been prepaid by $3,960.
Debit Prepayment and Credit Rent and insurance expenses $3,960
3. Closing inventory has been counted and is valued at $4,704.
Debit Financial position Inventory and credit profit and loss Inventory $4,704.
4. $784 of carriage represents carriage inwards on purchases.
Debit Purchase and Credit Carriage $784.
5. The allowance for receivables is to be increased by $207.
Debit irrecoverable debt and Credit Allowance for receivables $207
6. Equipment is to be depreciated at 15% per annum using the straight-line method.
Debit depreciation and Credit Accumulated depreciation $12,000SUGGESTED SOLUTIONS
Income statement
ACCOUNT | WORKING | DEBIT | CREDIT |
REVENUE | 200,000 | ||
INVENTORY OB | 3,920 | ||
PURCHASE | 130000 + 784 | 130,784 | |
LESS INVENTORY CB | 4,704 | ||
COST OF SALES | 130,000 | ||
GROSS PROFIT | 70,000 | ||
CARRIAGE | 3920-784 | 3,136 | |
RENT AND INSURANCE | 27120 +4500 -3960 | 27,660 | |
POSTAGE AND STATIONERY | 1,350 | ||
ADVERTISING | 320 | ||
SALARIES AND WAGES | 4,515 | ||
IRRECOVERABLE DEBTS | 335+207 | 542 | |
DEPRECIATION EXPENSES | 12000 | 12,000 | |
TOTAL EXPENSES | 49,523 | ||
PROFIT | 20,477 |
Financial position
ACCOUNT | WORKING | DEBIT | CREDIT |
NON CURRENT ASSETS | 80,000 | ||
LESS ACC DEP EQUIPMENT | 16000 + 12000 | (28,000) | |
TOTAL NON CURRENT ASSETS | 52,000 | ||
CURRENT ASSETS | |||
INVENTORY | 4,704 | ||
RECEIVABLES | 13,500 | ||
less allowance for receivables | (543) | ||
lreceivables | 12,957 | ||
PREPAYMENT | 3,960 | ||
BANK | 261 | ||
CASH | 414 | ||
TOTAL CURRENT ASSETS | 22,296 | ||
TOTAL ASSETS | 74,296 | ||
ACCOUNT | WORKING | DEBIT | CREDIT |
PAYABLES | 12,150 | ||
ACCRUAL | 4,500 | ||
TOTAL CURRENT LIABILITY | 16,650 | ||
Capital | 37,705 | ||
Profit | 20,477 | ||
DRAWING | 536 | ||
TOTAL EQUITY | 57,646 | ||
TOTAL LIABILITIES & EQUITY | 74,296 |
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2015 ACCA F3 Trading Account