Reference no: EM133155106

Question - The following Trial Balance was extracted from the books of Johnny Smith, a sole trader on 31 December 2014:

Trial Balance as of 31 December 2014

Details/Accounts	$	$
Return inwards	100,000
Cash	150,000
Accounts receivable	3,250,000
Salaries	1,800,000
Motor vehicle repairs	185,000
Insurance	75,000
Return outwards		70,000
Cash drawings	250,000
Bank		140,000
Bad debts	132,500
Sales		9,600,000
Discount allowed	155,000
Machinery	2,750,000
Accumulated depreciation on machinery		412,500
Stock, January 1, 2014	1,500,000
Commission received		150,000
Carriage inwards	125,000
Electricity	480,000
Furniture and fittings	900,000
Purchases	3,820,000
Discount received		240,000
Stationery	200,000
Capital		5,495,000
Motor vehicles	2,500,000
Provision for depreciation on motor vehicles		250,000
Accounts payable		2,100,000
Rent	210,000
Provision for bad and doubtful debts		125,000
	18,582,500	18,582,500

Notes:

(i) Stock on 31 December 2014 was valued at $2,000,000.

(ii) Commission receivable amounting to $75,000 was not entered to the account as at 31 December 2014.

(iii) Carriage inwards of $25,000 were owed at the end of the accounting period.

(iv) On 31 December 2014 Johnny Smith paid the amount of $40,000 for stationery to be received during the next year.

(v) The provision for bad and doubtful debts is to be adjusted to three percent (5%) of accounts receivable.

(vi) Depreciation is to be charged as follows: Machinery 10% pa. straight line; Furniture and fittings 10% pa.; and motor vehicles 20% pa reducing balance.

Required -

(a) Make an income Statement for the period ending 31 December 2014.

(b) Make statement of Financial Position for the financial year ending 31 December 2014.