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.