Question

Part 3: Financial statements - 40 marks From the following information of the accounting book of Hope Dunn, draw up: (1) an Income statement for the year ended 31 December 2017 (in €). (2) Prepare a Balance Sheet as at 31 December 2017 (in €). 400.000 91,000 255,000 35,000 51,000 Premises Purchases Sales Fixtures and Fittings Motor Cars Allowance for Depreciation: - Fixtures and Fittings • Motor Cars Bank Stock of goods at 1st January 2017 Cash Postage expenses 16,000 22,000 3.500 19,000 ROOT 4,070 15.000 Rent 2,500 1,100 11,250 2,600 1,250 29,450 13,200 200,000 Return outwards Return inwards General expenses Discount Allowed Discount Received Accounts Payable Trade creditors) Loan Interest Capital Salaries Insurance Motor expenses Accounts Receivable (Trade Debtors) Commission Received Carriage Inwards Carriage Outwards Drawings Bank Loan (till 2020) Total 27.200 3,400 9100 44,500 12,000 1,550 930 25,000 220,000 758,200 758,200 Additional Information: 1. Closing inventory as at 31 December 2017 €23,000 2. Motor expenses owing €250 3. Insurance prepaid €450 4. Three months loan interest is owing on the loan 5. The allowance for doubtful debts is to be adjusted to 2% of Accounts Receivable. 6. Rent prepaid 7. Hope Dunn paid for personal holiday from General expenses for own use (Drawings) 8. Motor cars are to be depreciated at 25% per annum using Reducing Balance method. 9. Fixtures and Fittings are to be depreciated 15% on cost. 10. Premises are not depreciated. €500 €2,500

Answer 1

		Income Statement
Opening Stock		19,000	Sales	2,55,000	2,53,900
Purchases	91,000	88,500	Return Inwards	-1100
Return Outwards	-2500		Closing Inventory		23,000
Carriage inwards		1,550
Gross Profit		1,67,850
		2,76,900			2,76,900
Postage Expenses		4,070	Gross profit		1,67,850
Rent	15,000	14,500	Discount Received		1,250
Prepaid Rent	-500
General Expenses	11,250	8,750	Commission Received		12,000
Drawings	-2500
Discount Allowed		2,600
Loan Interest	13,200	16,500
Outstanding Loan interest	3300
Salaries		27,200
Insurance	3,400	2,950
Prepaid Insurance	-450
Motor Expenses	8,100	8,350
Outstanding Motor expenses	250
Carriage Outwards		930
Allowance for doubtful debts		890
890
Depreciation		12500
Net profit		81,860
		1,81,100			1,81,100
Calculation of depreciation
Motor car	29000	25%	7250
Furniture & Fittings	35000	15%	5250

	Balance Sheet
Liability		Amount	Asset		Amount
			Premises		4,00,000
			Furniture & fittings		35,000
Allowance for Depreciation:			Motor car		51,000
Furniture & Fixtures	21250	50500	Stock		23,000
Motor Car	29250		Prepaid Insurance		450
Bank Loan		2,20,000	Accounts Recievable	44,500	43,610
Accounts Payable		29,450	Allowance for doubtful debts	-890
Outstanding Motor expenses		250	Prepaid Rent		500
Outstanding Loan interest		3,300	Bank		3,500
Capital	2,00,000	2,54,360	Cash		800
Net profit	81,860
Drawings	-27500
		557860			5,57,860