Question

Chippendale is the owner of a retired and the acounts of the business were subsequenty kept by Chippendale furnidure shop U3TDEC His double-entry was accurate fi.e debits - credits) but he did not aysel which T accounts to use Chippendale produced the flwing trial balance at 31 Decemtet 20x9 Cr 22,035 12,000 Dr Capital Chippendale Drawings- Chippendale Loan at 15% interest per annum Freehold property Motor vehicles-cos Motor vehicles-accumulated depreciation Shop fittings-cost 22,600 17,500 20,800 16,300 32,832 4200 3,710 Shop fittings-accumulated depreciation Inventory at 31 December 20x8 Trade receivables at 31 December 20X8 Trade payables at 31 December 20x8 Purchases General expenses Wages Cash sales Credit sales Provision for doubtful debts at 31 December 20X8 7,817 14,712 185,298 37,146 42,183 254,451 32,870 367 3,431 Bank Cash 300 365,276 365,276 The following additional information is available: 1. When Chippendale acquired his present premises he also purchased an identical shop next door, the two shops each costing E55,000. During 20X9 the shop next door was sold for £127,500.Chippendale credited the full amount of the proceeds to te freehold property T' account 2. Chippendale did not know how to deal with receivables so he ignored them entirely The credit sales' account actually represents the cash received from customers during 20x9. By matching these receipts against the file of sales invoices, it appears that the amount due by customers at 31 December 20x9 is £14,898. Of this total, £832 represents bad debts and a further E437 is regarded as doubtful. 3. A similar situation existed with the payables. The 'purchases' account is actually the total amount paid to suppliers during 20x9, the total of unpaid invoices at 31 December 20X9 is E18,002 4 Inventory at 31 December 20x9 is valued at a cost of £49,451. Included in this figure are several items of inventory which had originally cost Chippendale £9,270, but which are to be included in the January sale priced at E7,110 5. Cash sales incdude E1,400 from the sale of Chippendale's private car No entry has been made for part-time wages amounting to E3,650 paid drectly out of the shop takings (that is, before they were taken to the bank or recorded in the cash book). General expenses unpaid at 31 December 20X9 amounted to £4,470. These have not yet been accounted for 7.

Answer 1

Income Statement of Chippendale for the year ended 31st December 2009

Particulars	Debit $	Particulars	Credit $
Opening inventory	32832	Sales	254451
Purchases	188588	Closing inventory	47291
General Expenses(Net of prepaid insurance)	36738	Net Loss	17652
Wages	42183
Provision for bad debt	437
Bad debts	832
Reserve for inventory devaluation	2160
Part time wages	3650
Expense unpaid	4470
Interest expense Dec 2000	1544
Interest on loan@15%	1800
Depreciation on motor vehicle	4160
	319394		319394

Statement of Financial Position

Liabilities	Amount $	Assets	Amount $
Capital Chippendale	22035
		Motor Vehicle - 20800
		Less- Accumulated Dep -7870	12930
Loan 15%	12000
		Shop Fittings - 16300
Payable	18002	Less- Accumulated Dep -5410	3810
Expense payable	4470
Interest on loan payable	1800	Receivable - (14898-832-437)	13629
		Inventory = 49451
		Less-Reserve for devaluation=2160	47291
		Prepaid insurance	408
		Cash	300
		Bank overdraft	-20061
	58307		58307