Question

Question 5 [35] The following information relates to The Swallower: Pre-adjustment trial balance for the year ending 30 April 2020 RL R Balance sheet section Capital 252 610 Drawings 23 400 Land and buildings 270 000 Vehicles 64 000 Accumulated depreciation: Vehicles 20 560

Answer 1

Swallower Debit in R Credit in R Adjusting Enteries Trans. Particulars 1 Purchases a/c Dr. To Trade Inventory (Inventory adjusted) 360 360 2 Depreciation Expense a/c Dr. 8688 To Accum. Depre - Vehicles (To record depreciation) (64000 - 20560 ) x 20% 8688 2040 Depreciation Expense a/c Dr. To Accum. Depre - Furn. & Fitt (To record depreciation) 20400 x 10% 2040 3 Dr. 200 Bad Debts a/c To Trade Receivables (Uncollectibles written off) 200 725 Bad Debts a/c Dr. To Allowance for credit losses (Bad debts estimated) (14700 - 200 ) x 5% 725 1450 Rent Income a/c Dr. To Unearned Revenue (Entry corrected) 1450 6 1600 Interest Receivable a/c Dr. To Interest Revenue (Interest earned ) 10000 x 16% 1600 7 Dr. 200 Prepaid Insurance a/c To Insurance Expense (Entry corrected) 200 8 215 Telephone Expense a/c Dr. To Expense Payables (Telephone expense accrued) 215

Debit in R Credit in R 2340 1600 14500 421680 -7680 414000 725 29900 200 10000 270000 64000 269900 144100 29248 Adjusted Trial Balance For the month ended 30.4.2020 Particulars Bank Interest Receivable Trade Receivables Allowance for credit losses Trade Inventory Prepaid Insurance Fixed Deposit Land and Buildings Vehicles Accum. Depre - Vehicles Furniture and Fittings Accum. Depre - Furn. & Fitt Trade Payables Expense Payables Unearned Revenue Capital Drawings Rent Income Commission Income Interest Revenue Sales Sales Returns Purchases Purchases Returns Advertising Insurance Interest Expense Stationery Telephone expense Wages and Salaries expense Bad Debts Depreciation Expense Totals Statement of Income For the month ended 30.4.2020 Sales Sales Returns Net Sales Cost of goods sold: Opening Inventory 30260 Purchases 272960 Purchases Returns -3420 Closing Inventory -29900 Gross Profit Operating Expense: Advertising 8530 Insurance 2400 Stationery 1642 Telephone expense 2633 Wages and Salaries expense 30000 Bad Debts 925 Depreciation Expense 10728 Operating Income Non Operating items: Rent Income 17400 Commission Income 22500 Interest Revenue 1600 Interest Expense -2240 Net Income 20400 8450 16780 215 1450 252610 56858 87242 23400 17400 22500 1600 421680 7680 272960 39260 126502 3420 8530 2400 2240 1642 2633 30000 925 10728 776078 776078