Reference no: EM132641504
Question - The following are the ledger account balances of M. Munatamba as at 31st August 2020 a sole trader based in the Tourist Capital of Livingstone:
DR CR K K
M. Munatamba's Capital A/c 717,500
M. Munatamba's Drawings A/c 51,250
- Plant and Machinery 266,500
- Inventory (1Sept 2019) 97,375
- Purchases 594,500
- Sale returns 15,375
- Sundry Trade Receivables 354,650
- Furniture and Fixtures 24,600
- Freight and Duty 43,050
- Carriage outwards 12,300
- Rent, rates and taxes 26,650
- Printing and stationery 15,990
- Trade expenses 4,100
- Sales - 799,500
Purchases returns - 10,250
Discounts - 4,613
Insurance charges 4,869
- Salaries and wages 66,625
- Sundry Trade Payables - 151,700
Petty Cash 10,250
- Cash at Bank 95,479
- Totals 1,683,563 1,683,563
The following matters are to be taken into consideration:
i. Inventory on 31st August 2020 was counted and was valued at K102,500;
ii. Write off K2,050 as bad debts;
iii. Provision for doubtful debts to be created at 5% on trade receivables;
iv. Create a provision for discount on trade receivables and reserve for discount on trade payables at 2%;
v. Depreciation to be provided on:
a. Plant and machinery at 10%;
b. Furniture and Fixtures at 10%; vi. Insurance pre-paid was K769;
vii. Salary outstanding K5,125;
viii. A fire occurred in August 2020 in the go-down and K61, 500 worth of goods were destroyed. The insurance admitted the claim up to K30,750;
Required -
a. Prepare suitable final accounts for the year ended 31st August 2020?
b. Make a Statement of Financial Position at that date.