Question

Part 3: Final Accounts - 30 marks The following Trial Balance was extracted from the books of A.Scholes at the close of business on 28 February 2019. Dr, $ Cr, $ Purchases and Sales 11,280 19,740 Cash in Bank 1,140 Cash in hand 2 10 Equity Account 1 March 2018 9,900 Drawings 2,850 Office furniture 1,440 Rent 1,020 Wages and Salaries 2,580 Discounts 690 360 Debtors un Creditors 4,920 2,490 Stock 1 March 2018 2,970 Provision for bed debt Delivery van 2,400 Van running costs 450 Bad debt written off 810 Total 32,760 32,760 | 270 Additional information related to the reporting year asat 28 February, 2019: (a) Stocks $3,510. (b) Wages ans Salaries accrued $90. (c) Rent prepaid $140. (d) Van running costs owing $60. (e) Increase the provision for Bad debt by $60. (1) Provide the depreciation as follow: • Office furniture $ 180; - Delivery van $480. Required: Draw up the Income statement for the year ending 28 February, 2019 and the Balance sheet as at 28 February 2019.

Answer 1

19,050 A. Scholes TRADING AND PROFIT AND LOSS ACCOUNTS for the year ended 28 February, 2018 Sales $ 19,740 Less: Discount Allowed $ (690)| NET SALES (A) $ Less: Cost of Goods Sold (B) (Working Note -1) $ GROSS PROFIT (A-B) (C) $ EXPENSES Rent (1020-140) 880 Wages and Salaries (2580+90) 2,670 Van Running costs (450+60) 510 Bad debts written off (810+60) 870 Depreciation Expense: Office Furniture Delivery van 480 $ 660 $ 10,380 8,670 180 5,590 NET INCOME $ 3,080 WORKING NOTE 1 - CALCULATION OF COST OF GOODS SOLD 2,970 Opening Stock 1 March 2018 Purchases Less: Discount Received $ $ $ 11,280 (360) $ $ $ $ 10,920 13,890 (3,510) 10.380 LESS :Closing Stock 28 February 2019 Cost of Goods Sold

1,440 1,260 2.400 1,920 3,180 4,920 (330) $ A. Scholes BALANCE SHEET as on 28 February, 2019 ASSETS FIXED ASSETS Office Furniture Less: Accumulated Depreciation Delivery Van Less: Accumulated Depreciation TOTAL FIXED ASSETS (A) CURRENT ASSETS Debtors / ACCOUNTS RECEIVABLE Provision for doubtfuldebt ( 330 +60) Prepaid Rent Closing Stock Cash at Bank Cash in hand TOTAL CURRENT ASSETS (B) TOTAL ASSETS (A+B) LIABILITIES AND EQUITY LIABILITIES CURRENT LIABILITIES Creditors Wages and Salaries payable Van Running Costs Payable TOTAL CURRENT LIABILITIES CAPITAL (Working Note - 2) TOTAL LIABILITIES AND EQUITY $ 4,590 140 3,510 1,140 210 9,590 12,770 2,490 90 60 $ $ $ 2,640 10,130 12,770

WORKING NOTE 2 CAPITAL BALANCE at the End Capital at the beginning Less: drawings Add: Net Income CLOSING CAPITAL $ $ $ $ 9,900 (2,850) 3,080 10,130 WORKING NOTE 3) PROVISION FOR DOUBTFUL DEBTS: Provision at the beginning Add: Provision added during the year PROV SION FOR DOUBTFUL DEBTS 330 60 390