Question

I am currently having trouble revising my work as I do not know how to get the amount of the Closing Inventory in the Income Statement. Please help me.
UUTUS. 5 Record the following transactions of Carlos using double-entry bookkeeping; summarize them in the form of a trial balance, and prepare an income statement for the three-month period, and a statement of financial position as at the end of the period. 1 Jul Carlos started a business dealing in second-hand cars and opened a business bank account with £40,000 3 Jul Carlos borrows £15,000 from the Spano Bank 5 Jul Pays £5,000 to rent premises 8 Jul Buys furniture and equipment for £11,000 13 Jul Buys cars on credit from Motosales Ltd for £50,000 19 Jul Pays general expenses of £2,500 27 Jul Sells one car for £4,000 cash 3 Aug Sells cars on credit to Minki Cabs for £18,000 10 Aug Buys one car for £3,300 cash 16 Aug Buys cars on credit from Motosales Ltd for £22,000 30 Aug Pays £40,000 to Motosales Ltd 6 Sep Pays general expenses of £3,300 14 Sep Receives £15,000 from Minki Cabs 21 Sep Sells cars for £24,000 cash

Answer 1

Solution of the above problem is as under:

Journal Entries in the books of Carlos
Date	Account Titles and Explanation	Debit ($)	Credit ($)
Jul-01	Bank A/c Dr.	40000
	To Capital A/c		40000
	(Being business started with a capital amounting to $40000)
Jul-03	Bank A/c Dr.	15000
	To Bank Loan A/c		15000
	(Being loan taken from bank)
Jul-05	Rent Expenses A/c Dr.	5000
	To Bank A/c		5000
	(Being rent paid)
Jul-08	Furniture and Equipmnet A/c Dr.	11000
	To Bank A/c		11000
	(Being furniture purchased)
Jul-13	Purchases A/c Dr.	50000
	To Accounts Payable A/c		50000
	(Being cars purchased on credit)
Jul-19	General Expenses A/c Dr.	2500
	To Bank A/c		2500
	(Being general expenses paid)
Jul-27	Cash A/c Dr.	4000
	To Sales Revenue A/c		4000
	(Being car sold)
Aug-03	Accounts receivable A/c Dr.	18000
	To Sales Revenue A/c		18000
	(Being car sold on credit)
Aug-10	Purchases A/c Dr.	3300
	To Cash A/c		3300
	(Being car purchased)
Aug-16	Purchases A/c Dr.	22000
	To Accounts Payable A/c		22000
	(Being car purchased on credit)
Aug-30	Accounts Payable A/c Dr.	40000
	To Bank A/c		40000
	(Being amount paid to Motosale Ltd.)
Sep-06	General Expenses A/c Dr.	3300
	To Bank A/c		3300
	(Being expenses paid)
Sep-14	Bank A/c Dr.	15000
	To Accounts Receivable A/c		15000
	(Being amount received from Minki Cabs)
Sep-21	Cash A/c Dr.	24000
	To Sales Revenue A/c		24000
	(Being cash sales made)

Trial Balance
Account Titles	Debit ($)	Credit ($)
Cash	24700
Bank	8200
Accounts Receivable	3000
Furniture and Equipment	11000
Accounts Payable		32000
Bank Loan		15000
Capital		40000
Sales Revenue		46000
Purchases	75300
General Expenses	5800
Rent Expenses	5000
Total	133000	133000

Income Statement (Trading and Profit and Loss Account)
For the period ended September 30
Particulars	Working	Amount ($)
Sales Revenue		46000
Less:
Purchases		75300
Gross Profit/(Loss)		-29300
Less: Expenses
General Expenses	5800
Rent Expenses	5000
Total Expenses		-10800
Net Loss		-40100

Balance Sheet
For the period ended September 30
Particulars	Working	Amount ($)
Non-Current Assets
Furniture and Equipment	11000
Total Non Current Assets		11000
Current Assets
Cash	24700
Bank	8200
Accounts Receivable	3000
Total Current Assets		35900
Total Assets		46900
Non-current Liabilities
Bank Loan		15000
Current Liabilities
Accounts Payable		32000
Capital	40000
Less: Net Loss	-40100	-100
Total Liabilities		46900