Prepare a statement of profit or loss for Cho Chang

Assignment Help Financial Accounting

Reference no: EM132473577

Question - The following list of balances have been extracted from the books of Cho Chang, a sole trader trading as Unique Catering, at 30 September 2018:

	£		£
Motor expenses	3,050	Premises (cost)	80,000
Electricity	910	Equipment (cost)	32,500
lrrecoverable debts	300	Vehicles (cost)	25,000
Sundry expenses	3,200	Accumulated depreciation at 30 September 2017:
Trade receivables/debtors	19,630	- Premises	12,000
Trade payables/creditors	13,255	- Equipment	2,500
Bank (credit balance)	1,080	- Vehicles	8,000
Discounts received	1,900	Capital at 30 September 2017	79,775
Purchase returns	1,800	Sales	273,530
Sales returns	7,600	Purchases	199,400
5% loan	15,000	Wages and salaries	17,600
Rent and rates	11,400	Accountancy fees	900
Electricity accrual	150	Opening inventory	7,500

Additional information -

1. Fixed assets are depreciated on an annual basis using the following rates of depreciation: Premises 40-year useful life Equipment 10% straight line Vehicles 20% reducing balance

2. Cho Chang took £11,000 from the business bank account on 18 August 2018 to pay for a new conservatory on her house. She has recorded this within purchases in the above list of balances.

3. Closing inventory/stock has been valued at a cost of £8,120 on 30 September 2018.

4. Included in the balance for rent and rates is a payment of £4,000, covering the period from 1 July 2018 - 31 December 2018.

5. At 1 October 2017, the balance on the electricity accruals account was £150. During 2018, Cho Chang paid £910 covering the period to 31 July 2018. A closing accrual of £200 is required at 30 September 2018.

6. Trade receivables/debtors includes an amount owing from Joe Brown of £750. Joe Brown had been having financial difficulties for some time and has now been declared bankrupt. There has not previously been an allowance for receivables. As a result of Joe Brown's difficulties, a review of the recoverability of the remaining receivables has been done and it is considered that an allowance for receivables of £500 is required.

Required -

(a) Show how the year-end adjustments in notes (1) - (6) above will be processed in the accounts ('T Accounts' or 'Journal Entries' are acceptable).

(b) Prepare a statement of profit or loss for Cho Chang for the year ended 30 September 2018.

Reference no: EM132473577

Questions Cloud

Prepare the the debits and credits totaled : Prepare the The debits and credits totaled , The Capital figure in the trial balance columns, The total value of current assets, The debt ratio.

Importance of understanding the cost of capital : Think about the importance of understanding the cost of capital to a business. Comment on why it is important, and explain why as debt increases

What is the maximum price that a prudent investor : If Valorous has an equity cost of capital of 10?%, what is the maximum price that a prudent investor would be willing to pay for a share of Valorous stock?

What is the expected capital gain from the sale : If its equity cost of capital is 10?%, what is the expected capital gain from the sale of this stock at the end of the coming? year?

Prepare a statement of profit or loss for Cho Chang : Closing inventory/stock has been valued at a cost of £8,120 on 30 September 2018. Prepare a statement of profit or loss for Cho Chang

Determine the effective interest rate for company loan : You estimate your firm will need $25,000 to pay expenses for the year. Determine the effective interest rate for your company's loan.

Find firm payables turnover rate : Find your firm's payables turnover rate if accounts payable increase from $68,200 to $69.700, sales equal $942,800, and costs of goods sold equal $543,200.

How long does it take to sell your inventory : You determine that the cost of goods sold is 70 percent of sales. On average, how long does it take to sell your inventory?

Find the miller-orr optimal upper cash limit : Find the Miller-Orr optimal upper cash limit for your firm if $88,343 is needed each week to pay bills, the lower cash limit is $25,000

User Account

All Pages