Question

Using the new trial balance and additional notes given below Notes: 1 Closing inventory on 31 January 2015 was P2,000 2 Assets are to be depreciated at 25% at cost on a reducing balance method 3. Interest payable P100 was owing 4 Electricity P100 was paid in advance 5. Provision should be made for bad debts at 10% of debtors (11 marks) Draw up the income statement (8 marks) il Statement of Financial Position maluse and interpret the results of the financir (1 marks)

P stands for the currency which is BWP or P

Answer 1

Answer is given below

provision for bad debts at 10% of $10,000

BWP Income Statement for the year ended January 2015 Sales 34,000 Less: Sales return 500 Net Sales 33,500 Less: Cost of Goods sold Purchase 19,000 Less: Closing stock 2,000 Cost of Goods sold 17,000 Gross profit 16,500 Operating Expenses Rent expense 2,000 Telephone expenses 500 Transport expenses 300 Electricity ( $500-$100) 400 Interest expense ($300+$100) 400 Depreciation expense-Car 2,500 25% of 10,000 Depreciation expense- Furniture 25% of 3,000 Provision for bad debts 1,000 10% of 10,000 Total Operating expense 7,850 Net Profit 8,650 750 BWP 20,000 Statement of Owner's Equity For the year ended January 31, 2015 Opening Balance of Masego Lerro Capital Add: Net profit during the year Closing balance of Masego Lerro Capital 8,650 28,650 BWP 5,900 9,500 BALANCE SHEET AS ON JANUARY 31, 2015 Assets Current Assets Cash Bank Accounts Receivable 10,000 Less: Provison for bad debts - 1,000 Stock Stationary Prepaid electricity Total Current Assets 9,000 2,000 300 100 26,800 Fixed Assets Car 10,000 -2,500 Less: Depreciation 7,500 3,000 -750 2,250 9,750 36,550 Furniture Less: Depreciation Total Fixed Assets Total Assets Liabilities and Owner's Equity Current Liabilities Accounts payable Interest payable Total Current Liabilities 7,500 400 7,900 Masego Lerro Capital 28,650 Liabilities and Owner's Equity 36,550 500 3,000 Working notes: Accounts Receivable -Lesego Accounts Receivable -M Mothusi Accounts Receivable -L Mokone Accounts Receivable -M Moilwa Total Accounts receivable 2,500 4,000 10,000