Final Accounts With Adjustments

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Principles Of Accounting

Principles of Accounting Made Easy

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The

TheFinal AccountsFinal Accountsof a sole trader ( With Adjustments)of a sole trader ( With Adjustments)

The trading and profit & loss account and balance sheet prepared at the end of a year is known as The trading and profit & loss account and balance sheet prepared at the end of a year is known as FinalFinal accounts. While preparing the final accounts, there may be some

accounts. While preparing the final accounts, there may be some items so far items so far not adjusted. These itemsnot adjusted. These items are to be

are to be adjusted in the final accounts for adjusted in the final accounts for calculating the correct profit or loss of the business. The usualcalculating the correct profit or loss of the business. The usual adjustments in the final accounts

adjustments in the final accounts are:-a.

a.Expenses owing :-Expenses owing :- These are the These are the expenses incurred during the year but not paid in cash. expenses incurred during the year but not paid in cash. ThisThis amount will be paid in the near future (next year). The owing expense is to be added with the

amount will be paid in the near future (next year). The owing expense is to be added with the amount of amount of same expense already paid given in the

same expense already paid given in thetrial balancetrial balanceand it should be shown in the balance sheetand it should be shown in the balance sheet as a

as a current liability.current liability.

The double entry for recording the expenses owing is The double entry for recording the expenses owing is Debit

Debit Expenses Expenses accountaccount Credit

Credit Expenses Expenses owing owing accountaccount This expense is also known a

This expense is also known as outstanding expenses, expenses payable or expense payable.s outstanding expenses, expenses payable or expense payable. b.

b.Prepaid expense. :-Prepaid expense. :-This is the expense paid during the year for the benefit of the next year. TheThis is the expense paid during the year for the benefit of the next year. The portion of the expense which is

portion of the expense which is prepaid is to be deducted from the prepaid is to be deducted from the total expenses already paid during thetotal expenses already paid during the year (given in the trial balance) and shown as current asset in the balance sheet.

year (given in the trial balance) and shown as current asset in the balance sheet. The double entry for recording the prepaid expense is

The double entry for recording the prepaid expense is Debit

Debit Prepaid Prepaid expense expense account account andand Credit

Credit Expense Expense accountaccount This expense is also known a

This expense is also known as expense paid in advance or s expense paid in advance or unexpired expenseunexpired expense c. Accrued

income:-c. Accrued income:-The income earned during the year but The income earned during the year but not received in cash is not received in cash is known as accruedknown as accrued income. The amount of a

income. The amount of accrued income is to be considered as current year’s ccrued income is to be considered as current year’s income and addedincome and added with the concerned income received during the year(given in the

with the concerned income received during the year(given in the trial balance) and shown as a trial balance) and shown as a currentcurrent asset in the balance sheet.

asset in the balance sheet.

The double entry for recording the accrued income is: The double entry for recording the accrued income is: Debit

Debit Accrued Accrued income income account account andand Credit

Credit Income Income accountaccount The accrued income is also k

The accrued income is also known as outstanding income.nown as outstanding income. d. Income received in

advance:-d. Income received in advance:-This is the income received during the year This is the income received during the year for the services to befor the services to be rendered during the next year.

rendered during the next year. Since this income is not related to the current year, it should be deductedSince this income is not related to the current year, it should be deducted from the concerned income (given in the

from the concerned income (given in the trial balance) and shown as a trial balance) and shown as a current liabilitycurrent liability in the balance sheet.

in the balance sheet.

The double entry for recording the income received in advance is: The double entry for recording the income received in advance is: Debit

Debit Income Income account account andand Credit

Credit Income Income received received in in advanceadvance This is also known as

This is also known as unexpired income.unexpired income. e.

e. DepreciatioDepreciation:-n:-The part of the cost of a The part of the cost of a fixed asset that is consumed by a business during the periodfixed asset that is consumed by a business during the period of its use is known as depreciation. It is considered as an expense in the business therefore shown as an of its use is known as depreciation. It is considered as an expense in the business therefore shown as an expense in the profit &

expense in the profit & loss account and deducted from the cost loss account and deducted from the cost price of the concerned fixed asset in price of the concerned fixed asset in thethe balance sheet.

balance sheet. The double entry

The double entry for recording depreciation is:for recording depreciation is: Debit

Debit Profit Profit & & loss loss account account andand Credit

Credit Depreciation Depreciation accountaccount

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f. Bad

debt:-f. Bad debt:-The part of the amount of debtors which cannot be recovered is known as bad debt. It is anThe part of the amount of debtors which cannot be recovered is known as bad debt. It is an expense to be shown in the profit & loss account. If the bad debt appears in the

expense to be shown in the profit & loss account. If the bad debt appears in the trial balance, it is knowntrial balance, it is known as bad debt written off

as bad debt written off and shown in the and shown in the profit & loss account only. If bad profit & loss account only. If bad debt information appearsdebt information appears among the adjustment points below the trial

among the adjustment points below the trial balance, then it should be shown as balance, then it should be shown as an expense in the an expense in the profitprofit & loss account and shown as a deduction from the debtors in the balance

& loss account and shown as a deduction from the debtors in the balance sheet under the heading “current assets”.

sheet under the heading “current assets”. The double entry for recording the bad debt is: The double entry for recording the bad debt is: Debit

Debit Bad Bad debt debt account account andand Credit

Credit Debtors Debtors accountaccount

g. Goods drawings by the owner for his personal g. Goods drawings by the owner for his personal use:-The amount of

The amount of goods withdrawn by the owner for his personal use goods withdrawn by the owner for his personal use is to be is to be considered as drawing. Theconsidered as drawing. The double entry for recording the goods drawings is:

double entry for recording the goods drawings is: Debit

Debit Drawings Drawings account account andand Credit

Credit Purchase Purchase account account or sales or sales accountaccount The amount of

The amount of goods drawings should be deducted form purchases and capital in the balancegoods drawings should be deducted form purchases and capital in the balance sheet.

sheet. MCQ MCQ

A.

A. Private Private company company B. B. Public Public limited limited companycompany C.

C. Public Public corporation corporation D.CorporationD.Corporation

2. What is the authorized share capital of a limited company? 2. What is the authorized share capital of a limited company? A.

A. The The issued issued share share capital capital B. B. Issued Issued share share capital capital plus plus reservesreserves C. Issued share capital plus debentures

C. Issued share capital plus debentures

D. The shares that a company is allowed to issue by law D. The shares that a company is allowed to issue by law 3. The liability of share

3. The liability of share holders of a public limited company is limited to:holders of a public limited company is limited to: A.

A. paid paid up up value value of of shares shares B. B. nominal nominal value value of of sharesshares C.

C. extent extent of of private private assets assets D. D. called called up up share share capitalcapital 4. What is the other name of

4. What is the other name of authorized capital?authorized capital? A.

A. issued issued capital capital B. B. Nominal Nominal capital capital C. C. Uncalled Uncalled capital capital D. D. Calls Calls in in arrearsarrears 5. The debenture interest paid is recorded in

5. The debenture interest paid is recorded in which part of the final which part of the final accounts of a limited company?accounts of a limited company? A.

A. Trading Trading account account B. B. Profit Profit and and loss loss accountaccount C. Profit

C. Profit and loss and loss appropriaappropriation account tion account D. Balance shD. Balance sheeteet 6. The dividend is calculated on which

6. The dividend is calculated on which of the following values of shares?of the following values of shares? A.

A. Authorized Authorized share share capital capital B. B. Issued Issued share share capitalcapital C.

C. Called Called up up share share capital capital D. D. Paid Paid up up share share capitalcapital 7. Which of the

7. Which of the following is not included in the share holders’ funds?following is not included in the share holders’ funds? A.

A. Debentures Debentures B. B. General General reservesreserves C.

C. Ordinary Ordinary share share capital capital D. D. Preference Preference share share capitalcapital 8. Retained profit of a

8. Retained profit of a limited company belongs to the:limited company belongs to the: A.

A. directors’ directors’ B. B. debenture debenture holders’ holders’ C. C. shareholdershareholders s D. D. companycompany 9. Proposed dividends are;

9. Proposed dividends are;

A. shown as a current liability on the balance sheet A. shown as a current liability on the balance sheet B. debited with other business expenses in the

B. debited with other business expenses in the profit and loss accountprofit and loss account C. paid from capital reserves

C. paid from capital reserves D. credited to

D. credited to the appropriation accountthe appropriation account 10. In the

10. In the final accounts of a final accounts of a limited company, directorlimited company, directors’ remuneration is:s’ remuneration is: A.

A. debited debited in in the the trading trading account account B. B. debited debited in in the the profit profit and and loss loss accountaccount C. debited

C. debited in the apprin the appropriation acopriation account count D. deducD. deducted from shted from share capital iare capital in the B.Sn the B.S 11. Under which heading is share

11. Under which heading is share premium account shown?premium account shown? A.

A. Current Current assets assets B. B. Current Current liabilities liabilities C. C. Share Share capital capital D. D. Reserves Reserves & & SurplusSurplus 12. The interim dividend paid is shown

12. The interim dividend paid is shown in the:in the: A.

A. profit profit and and loss loss account account B. B. profit profit and and loss loss appropriappropriation ation account account onlyonly 1.

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C. profit and loss account and

C. profit and loss account and balance sheetbalance sheet

D. profit and loss appropriation account and balance sheet D. profit and loss appropriation account and balance sheet Assignment Questions

Assignment Questions Q 1.

Q 1. The following trial balThe following trial balance was taken from the books of a sole trader for tance was taken from the books of a sole trader for the he year endedyear ended 31

31ststDec 2003:-Dec

2003:-Consider the following points at 31

Consider the following points at 31ststDecember 2003:-December 2003:-1. The closing stock was valued at $ 12 400

1. The closing stock was valued at $ 12 400 2. Rent, rates & insurance was owing by & 500. 2. Rent, rates & insurance was owing by & 500. `

` 3. 3. Commission Commission received received in in advance advance is is $ $ 1 1 000.000. 4. Salaries & wages owing $ 880.

4. Salaries & wages owing $ 880. 5. Advertisement expense is prepaid by $ 5. Advertisement expense is prepaid by $ 350.350. 6. Carriage inwards payable $ 800.

6. Carriage inwards payable $ 800. From the above information, you are

From the above information, you are required to prepare at 31required to prepare at 31ststDecember 2003:-December 2003:-a.

a.The Trading & Profit & The Trading & Profit & loss accountloss account b.

b.The Balance SheetThe Balance Sheet Q 2.

Q 2. The following account balances were extracted from the The following account balances were extracted from the books of a sole traderbooks of a sole trader for the year ended 31

for the year ended 31ststDecember 2003:-December 2003:-Stock on 1

Stock on 1ststJan Jan 2003 2003 12 12 300 300 Purchases Purchases 1 1 25 25 000000 Sales

Sales 1 1 58 58 000 000 Discount Discount received received 2 2 400400 Rent

Rent paid paid 7 7 000 000 Fixture Fixture & & fittings fittings 13 13 500500 Motor

Motor Car Car 10 10 500 500 Advertising Advertising 1 1 960960 Motor

Motor van van expenses expenses 1 1 120 120 Heating Heating & & lighting lighting 1 1 200200 Wages

Wages to to assistant assistant 6 6 000 000 Accountant’s Accountant’s fee fee 1 1 200200 Insurance

Insurance 700 700 Debtors Debtors 3 3 100100 Creditors

Creditors 2 2 700 700 Cash Cash in in hand hand 250250 Bank

Bank overdraft overdraft 3 3 840 840 Bank Bank charges charges 270270 Drawings

Drawings 9 9 000 000 Interest Interest received received 1 1 400400 Capital

Capital 27 27 210 210 License License & & taxes taxes 500500 Carriage

Carriage inwards inwards 1 1 000 000 Carriage Carriage outwards outwards 950950 The following points are to be

The following points are to be considered at 31considered at 31ststDec 2003:-Dec 2003:-1)

1) The The closing closing stock stock was was valued valued at at $ $ 10 10 500 500 2) 2) Rent Rent prepaid prepaid was was $ $ 1 1 000000 3)

3) Motor Motor van van expenses expenses owing owing $ $ 200 200 4) 4) Interest Interest earned earned but but not not received received $ $ 600600 5)

5) Wages Wages to to assistant assistant outstanding outstanding $ $ 1 1 200 200 6) 6) License License and and taxes taxes payable payable $ $ 300300 From the above information, you are

From the above information, you are required to prepare:-required to prepare:-a.

a.The trading & profit & loss account for the year ended 31The trading & profit & loss account for the year ended 31ststDec 2003-05-03Dec 2003-05-03 Account balances

Account balances Debit $Debit $ Credit $Credit $ Purchase & sales

Purchase & sales 992 2 330000 1 1 990 0 330000 Carriage inwards

Carriage inwards 5 2005 200

Drawings

Drawings 5 0005 000

Rent, rates & insurance

Rent, rates & insurance 4 5004 500 Postage Postage 3 0003 000 Stationery Stationery 2 7002 700 Capital Capital 59 40059 400 Machinery Machinery 55 00055 000 Buildings Buildings 45 00045 000

Furniture & Fittings

Furniture & Fittings 15 00015 000 Debtors & Creditors

Debtors & Creditors 114 4 550000 113 3 220000 Commission received Commission received 7 0007 000 Opening stock Opening stock 1 0001 000 Cash at bank Cash at bank 2 5002 500 Cash in hand Cash in hand 1 8001 800 Discounts Discounts 225500 3 3 992200 Bad debt Bad debt 800800

Salaries & Wages

Salaries & Wages 22 12022 120 Advertising

Advertising 1 8501 850

Carriage outwards

Carriage outwards 1 2001 200

Returns in & out

Returns in & out 880000 770000 Total

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b.

b.The balance sheet at 31The balance sheet at 31ststDec 2003.Dec 2003.

Q 3.

Q 3. The following trial balance was extracted from the books of a sole trader for the year endedThe following trial balance was extracted from the books of a sole trader for the year ended 31

31ststMarch 2003:-March

2003:- Adjustments:-1) The stock

1) The stock on 31-3-2003 on 31-3-2003 was valued at was valued at $ 6 500 $ 6 500 2) Carriag2) Carriage outwards we outwards was owing bas owing by $ 100y $ 100 3)

3) Rates Rates prepaid prepaid $ $ 150 150 4) 4) Rent Rent for for the the year year was was earned earned but but not not received received $ $ 700700 5) General expenses owing $ 180

5) General expenses owing $ 180

From the above information you are

From the above information you are required to prepare at 31required to prepare at 31stst_{March 2003:-}_March

2003:-a.

a.The Trading and profit & loss aThe Trading and profit & loss accountccount b.

b.The Balance sheetThe Balance sheet

Q 4.

Q 4. The following trial balance was extracted from the The following trial balance was extracted from the books of Martin klin forbooks of Martin klin for the year ended 31

the year ended 31ststDec 2003:-Dec

2003:-

Adjustments:-1. The closing stock was valued at $ 6 7

1. The closing stock was valued at $ 6 700 at 3100 at 31stst Dec 2003-05-03Dec 2003-05-03 2. Wages & salaries was owing by $ 1

2. Wages & salaries was owing by $ 1 100100 3. General office expenses owing $ 150 3. General office expenses owing $ 150 4. Rent prepaid is 280

4. Rent prepaid is 280

5. Commission receivable $ 140 5. Commission receivable $ 140 From the a

From the above information, Prepare:-bove information, Prepare:-A

Accccoouunnt t bbaallaanncceess DDeebbiit t $$ CCrreeddiit t $$ Purchases & Sales

Purchases & Sales 339 9 660000 776 6 000000 Returns Returns 330000 445500 Carriage inwards Carriage inwards 1 2001 200 Carriage outwards Carriage outwards 900900 Opening stock Opening stock 5 2005 200 Salaries Salaries 7 5507 550 Commission Commission 670670 Wages Wages 3 0003 000

Debtors & Creditors

Debtors & Creditors 8 8 000000 4 4 220000 Discounts

Discounts 550000 880000

Plant & Machinery

Plant & Machinery 19 00019 000 Rates

Rates 450450

Furniture & Fittings

Furniture & Fittings 6 5006 500 Bank overdraft Bank overdraft 3 5003 500 Office expenses Office expenses 150150 General expenses General expenses 600600 Cash in hand Cash in hand 250250 Bank Loan Bank Loan 5 0005 000 Capital Capital 3 9203 920 Total Total 993 3 887700 993 3 887700 Debit balances

Debit balances $$ Credit balancesCredit balances $$ Purchases

Purchases 22 60022 600SalesSales 40 70040 700 Stock on 1-1-2003

Stock on 1-1-2003 5 2005 200CapitalCapital 5 5805 580 Cash in hand

Cash in hand 190190Bank overdraftBank overdraft 7 0007 000 Discount allowed

Discount allowed 1 4001 400Discount receivedDiscount received 900900 Returns in

Returns in 810810Returns outReturns out 570570 Carriage outwards

Carriage outwards 2 1602 160Commission receivedCommission received 660660 Rent & insurance

Rent & insurance 1 7001 700CreditorsCreditors 6 0006 000 Fixtures & Fittings

Fixtures & Fittings 1 0001 000 Delivery van Delivery van 2 3002 300 Debtors Debtors 11 90011 900 Drawings Drawings 2 8002 800 Wages & salaries

Wages & salaries 8 9008 900 General office expenses

General office expenses 450450 Total

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a.

a.The trading and profit & loss aThe trading and profit & loss account for the year ended 31ccount for the year ended 31ststDec 2003Dec 2003 b.

b.The balance sheet at 31The balance sheet at 31ststDec 2003Dec 2003

Q 5.

Q 5. The following trial balaThe following trial balance had been taken from the books of a sole tradnce had been taken from the books of a sole trader for er for the year endedthe year ended 31

31ststDec 2003:-Dec

2003:-Additional

Additional information:information:- -1. The stock on 31

1. The stock on 31stst_{Dec 2003 was valued at $ 4 750}_{Dec 2003 was valued at $ 4 750}

2. Power charges unpaid at 31

2. Power charges unpaid at 31ststDec 2003 was $ 2 000Dec 2003 was $ 2 000 3. Salary paid in advance at 31

3. Salary paid in advance at 31ststDec 2003 was $ 3 000Dec 2003 was $ 3 000 4. depreciate all the fixed assets @ 10 % p.a. on cost 4. depreciate all the fixed assets @ 10 % p.a. on cost 5 Provide the provis

5 Provide the provision for bad debts at ion for bad debts at $ 500$ 500 From the above ,

From the above , you are required to prepare:-you are required to

prepare:-The trading and profit & loss account for the year ended 31

The trading and profit & loss account for the year ended 31ststDec 2003 and a balance sheetDec 2003 and a balance sheet

Q 6.

Q 6. The following trial balance was taken from the books of a sole trader for theThe following trial balance was taken from the books of a sole trader for the Year ended 31

Year ended 31stst_{March 2004:-}_March

2004:-

Notes:-1. The stock on 31-3-2004 was valued at $ 1. The stock on 31-3-2004 was valued at $ 4 2004 200 2. Salaries & wages owing for the year ended 31

2. Salaries & wages owing for the year ended 31stst_{March 2004 was $ 1 200}_{March 2004 was $ 1 200}

3. 2.5% of the debtors should be written off as bad debt 3. 2.5% of the debtors should be written off as bad debt Account balances

Account balances Debit $Debit $ Credit $Credit $ Purchases & sales

Purchases & sales 770 0 000000 1 1 446 6 000000 Returns in & out

Returns in & out 1 1 550000 1 1 660000 Carriage inwards Carriage inwards 6 0006 000 Carriage outwards Carriage outwards 3 0003 000 Discount received Discount received 6 1006 100 Telephone charges Telephone charges 2 0002 000 Rent paid Rent paid 700700 Advertisement Advertisement 1 1001 100

Debtors & Creditors

Debtors & Creditors 7 7 770000 2 2 000000 Bank loan Bank loan 10 00010 000 Cash in hand Cash in hand 3 7503 750 Power charges Power charges 1 0001 000

Salaries & wages

Salaries & wages 12 00012 000 Premises at cost Premises at cost 40 00040 000 Plant at cost Plant at cost 35 00035 000 Machinery at cost Machinery at cost 15 00015 000 Motor car at cost

Motor car at cost 38 00038 000 Capital Capital 75 80075 800 Drawings Drawings 1 2501 250 Stock on 1-1-2003 Stock on 1-1-2003 3 5003 500 Total Total 2 2 441 1 550000 2 2 441 1 550000 Account balances

Account balances Debit $Debit $ Credit $Credit $ Opening stock

Opening stock 2 0002 000

Purchases and Sales

Purchases and Sales 225 5 660000 444 4 660000 Carriage inwards

Carriage inwards 1 4001 400

Stationery

Stationery 500500

Debtors & Creditors

Debtors & Creditors 8 8 000000 6 6 000000 Plant & Machinery

Plant & Machinery 10 00010 000 Buildings Buildings 11 00011 000 Furniture Furniture 4 0004 000 Repairs to building Repairs to building 1 0001 000 Carriage out Carriage out 1 6001 600

Salaries & wages

Salaries & wages 9 8009 800 Office expenses

Office expenses 200200

General expenses

General expenses 2 5002 500

Drawings & Capital

Drawings & Capital 2 2 550000 330 0 770000 Cash in hand

Cash in hand 1 2001 200

Interest paid

Interest paid 200200

Discount allowed & received

Discount allowed & received 2 2 110000 3 3 000000 Commission paid

Commission paid 200200

Rent & rates

Rent & rates 1 5001 500

Returns Returns 220000 550000 Bank Bank 700700 Total Total 885 5 550000 885 5 550000

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4. Provide provision for depreciatio

4. Provide provision for depreciation on all n on all the fixed assets @ the fixed assets @ 10% p.a.10% p.a. 5. Rent & rates paid in advance $

5. Rent & rates paid in advance $ 200200

6 The owner had taken goods costing $ 600 for his own use not entered in the 6 The owner had taken goods costing $ 600 for his own use not entered in the books of the business

books of the business Required prepare Required prepare :-a.

a.The trading and profit & loss account for the year ended 31The trading and profit & loss account for the year ended 31ststMarch 2004.March 2004. b.

b.The balance sheet at 31The balance sheet at 31ststMarch 2004.March 2004. Q 7

Q 7 Following is the trial balance extracted from the Following is the trial balance extracted from the books of Mr. Young, a sole books of Mr. Young, a sole trader, for thetrader, for the Year ended 31

Year ended 31ststDec 2002:-Dec

2002:-Prepare Trading and profit & loss account for the

Prepare Trading and profit & loss account for the year ended 31year ended 31ststDec Dec 2002 2002 and and the the balance balance sheetsheet as at that date aft

as at that date after taking into account the followinger taking into account the following:- :-1. The closing stock was valued at $ 2

1. The closing stock was valued at $ 2 700700 2. Heating & lighting unpaid at 31-12-02 was $ 250 2. Heating & lighting unpaid at 31-12-02 was $ 250 3. Depreciate furniture & equipment by 10% 3. Depreciate furniture & equipment by 10% on cost.on cost. 4. Rates paid in advance at the year end

4. Rates paid in advance at the year end was $ 100was $ 100 5. Interest on loan for the whole year @

5. Interest on loan for the whole year @ 10% p.a. is outstanding10% p.a. is outstanding Q 8.

Q 8. The following trial balance was taken from the books of a sole trader for the year endedThe following trial balance was taken from the books of a sole trader for the year ended 31

31ststDec 2002:-Dec 2002:-A

Accccoouunnt t bbaallaanncceess DDeebbiit t $$ CCrreeddiit t $$ Capital on 1

Capital on 1ststJan 2002Jan 2002 37 47037 470 Debtors & Creditors

Debtors & Creditors 1 1 550000 225500 Premises

Premises 50 00050 000

Loan ( payable after 5 years)

Loan ( payable after 5 years) 10 00010 000 Furniture & Equipment at cost

Furniture & Equipment at cost 10 00010 000 Provision for depreciation on

Provision for depreciation on Furniture& Furniture& equipment equipment 4 000 4 000 Cash in hand Cash in hand 120120 Maintenance cost of e

Maintenance cost of equipmentquipment 750750 Stock on 1-1-2002 Stock on 1-1-2002 1 5001 500 Drawings Drawings 12 00012 000 Rates Rates 1 1001 100

Heating & lighting

Heating & lighting 1 3001 300 Postage &telegram

Postage &telegram 1 2501 250 Repairs to premises

Repairs to premises 1 4001 400 Purchases and sales

Purchases and sales 114 4 000000 445 5 000000 Wages Wages 1 8001 800 Total Total 996 6 772200 996 6 772200 A Accccoouunnt t bbaallaanncceess DDeebbiit t $$ CCrreeddiit t $$ Purchase & sales

Purchase & sales 668 8 0 00 000 1 1 220 0 221 01 0 Returns in & out

Returns in & out 1 1 000000 770000 Carriage

Carriage 7 7007 700

General expenses

General expenses 360360

Salaries & wages

Salaries & wages 13 76013 760 Commission

Commission 600600

Discount from creditors

Discount from creditors 300300

Discount to debtors Discount to debtors 550550 Interest Interest 1 0001 000 Rent Rent 2 5002 500

Rates & taxes

Rates & taxes 870870

Advertisement Advertisement 1 0101 010 Office expenses Office expenses 750750 Bad debt Bad debt 1 2001 200 Furniture Furniture 5 0005 000

Land & buildings

Land & buildings 30 00030 000 Plant & Machinery

Plant & Machinery 15 00015 000 Provision for depreciation on

Provision for depreciation on :-Furniture

Furniture 500500

Plant & machinery

Plant & machinery 1 5001 500 Land & building

Land & building 3 0003 000

Debtors & creditors

Debtors & creditors 8 8 000000 4 4 550000 Drawings & capital

Drawings & capital 2 2 000000 338 8 992200 Provision for bad debt

Provision for bad debt 760760

Cash in hand Cash in hand 3 1203 120 Cash at bank Cash at bank 4 0004 000 Opening stock Opening stock 5 0005 000 Total Total 1 71 70 90 99090 1 71 70 90 99090

(7)

Adjustments:-1. The stock at the end wa

1. The stock at the end was valued at $ 6 s valued at $ 6 250250 2. Salaries and wages owing at the end of the

2. Salaries and wages owing at the end of the year was $ 1 240year was $ 1 240 3. Commission accrued $ 200

3. Commission accrued $ 200

4. Increase the provision for bad debts by 4. Increase the provision for bad debts by $ 240$ 240

5. Provide the provision for depreciation on all the fixed assets

5. Provide the provision for depreciation on all the fixed assets @ 10% p.a.@ 10% p.a. 6. $ 4

6. $ 4 500 of the 500 of the carriage represents carriagcarriage represents carriage on goods purchasede on goods purchased

7. The owner had taken goods costing $ 900 for his own use, not recorded in the books 7. The owner had taken goods costing $ 900 for his own use, not recorded in the books Prepare the set of final accounts at 31

Prepare the set of final accounts at 31ststDec 2002Dec 2002

Q 9.

Q 9. The trial balance shown below was extracted from the books of a sole trader for the year endedThe trial balance shown below was extracted from the books of a sole trader for the year ended 31

31ststMarch 2003:-March

2003:-

Notes:-Notes:- 1. Stock at 311. Stock at 31ststMarch 2003 was valued at $ 4 March 2003 was valued at $ 4 750750 2. Power charges unpaid at the end of the year was $ 2. Power charges unpaid at the end of the year was $ 2 0002 000 3. Salaries paid in advance at the end of

3. Salaries paid in advance at the end of the year was $ 3 the year was $ 3 000000 4. Depreciate all the fixed assets @ 10% p.a.

4. Depreciate all the fixed assets @ 10% p.a.

5. Interest on bank loan @ 7% p.a. is owing for the whole year 5. Interest on bank loan @ 7% p.a. is owing for the whole year 6. Create the

6. Create the provision for bad debt at 5% provision for bad debt at 5% on debtors.on debtors. Prepare the set of final accounts as at 31

Prepare the set of final accounts as at 31ststDec 2003Dec 2003

Q 10.

Q 10. The following trial balance was taken The following trial balance was taken form the books of Alfred form the books of Alfred for the year ended 31-12-03for the year ended 31-12-03 A

Accccoouunnt t bbaallaanncceess DDeebbiit t $$ CCrreeddiit t $$ Purchases & Sales

Purchases & Sales 660 0 000 00 0 1 1 226 6 000000 Returns inwards and outwards

Returns inwards and outwards 1 1 550000 1 1 660000 Carriage inwards Carriage inwards 600600 Carriage outwards Carriage outwards 300300 Discount received Discount received 3 1003 100 Rent paid Rent paid 700700 Communication expenses Communication expenses 2 0002 000 Advertisement Advertisement 1 1001 100 Debtors and creditors

Debtors and creditors 5 5 000000 2 2 000000 Bank loan (long term)

Bank loan (long term) 10 00010 000 Cash in hand

Cash in hand 3 7503 750

Power charges

Power charges 1 0001 000 Salaries & wages

Salaries & wages 12 00012 000 Premises Premises 50 00050 000 Plant Plant 25 00025 000 Machinery Machinery 10 00010 000 Motor Car Motor Car 40 00040 000 Capital Capital 75 00075 000 Drawings Drawings 1 2501 250 Stock on 1-1-2003 Stock on 1-1-2003 3 5003 500 T Toottaall 221177770000 221177770000 Debit balances

Debit balances $$ Credit balancesCredit balances $$ Returns inwards

Returns inwards 30 0030 00CapitalCapital 1 00 0001 00 000 Drawings

Drawings 70 0070 00CreditorsCreditors 26 00026 000 Land & building

Land & building 20 00020 000SalesSales 1 69 0001 69 000 Plant & machinery

Plant & machinery 45 00045 000Provision for bad debtsProvision for bad debts 1 0001 000 Debtors

Debtors 40 50040 500Purchase returnsPurchase returns 4 0004 000 Purchases

Purchases 85 00085 000 Rent

Rent 3 0003 000

Postage & telegram

Postage & telegram 500500 Advertising Advertising 10 00010 000 Cash in hand Cash in hand 10 50010 500 Stock on 1-1-03 Stock on 1-1-03 23 00023 000 Wages Wages 13 00013 000 Telephone charges Telephone charges 500500 Salaries Salaries 13 25013 250 Printing & Stationery

Printing & Stationery 890890 Commission Commission 5 1005 100 Travelling Travelling 1 5001 500 Carriage inwards Carriage inwards 6 3006 300 Motor van Motor van 1 9001 900 Cash at bank Cash at bank 10 06010 060 T Toottaall 330000000000 TToottaall 330000000000

(8)

Adjustments:-1. The closing stock was valued at $ 15 000 1. The closing stock was valued at $ 15 000 2. Rent owed by $ 600

2. Rent owed by $ 600

3. Salaries Payable at the end of the year

3. Salaries Payable at the end of the year was $ 250was $ 250 4. Commission

4. Commission paid in advance wapaid in advance was $ s $ 1 1001 100 5. Provide for the provision for bad debt a

5. Provide for the provision for bad debt at 5% on the t 5% on the year end debtorsyear end debtors

6. Depreciate land and building @ 5% , Plant and Machinery and Motor Van @ 10% p.a. on cost 6. Depreciate land and building @ 5% , Plant and Machinery and Motor Van @ 10% p.a. on cost Required to prepare at 31

Required to prepare at 31ststDec 2003:-Dec 2003:-a.

a.The trading & profit & loss The trading & profit & loss accountaccount b.b.The balance sheetThe balance sheet Q 11.

Q 11. The following trial balance was related to a sole trader at 31The following trial balance was related to a sole trader at 31ststDec 2003Dec 2003

Adjustments:-1) The closing stock was valued at $ 4 1) The closing stock was valued at $ 4 998998 2) Salaries and wages unpaid at the end of the

2) Salaries and wages unpaid at the end of the year was $ 533year was $ 533

3) Depreciate motor vehicle @ 10% and Fixture & fittings @ 5% p.a. on cost 3) Depreciate motor vehicle @ 10% and Fixture & fittings @ 5% p.a. on cost 4)

4) Rent Rent paid paid in in advance advance was was $ $ 176 176 5) 5) Carriage Carriage inwards inwards owing owing was was $ $ 6666 6) Increase the provision for bad debts to $ 800

6) Increase the provision for bad debts to $ 800 From the above information, you are required to prepar

From the above information, you are required to prepare the set of e the set of final accounts at 31st Dec 2003final accounts at 31st Dec 2003

Q 12.

Q 12. From the following trial balance, prepare trading and profit & loss aFrom the following trial balance, prepare trading and profit & loss account and balance sheetccount and balance sheet at 31

at 31ststDec 2001:-Dec 2001:-Account balances

Account balances DDeebbiit t $$ CCrreeddiit t $$ Purchases & Sales

Purchases & Sales 111 1 555566 118 8 000000 Opening stock Opening stock 3 7763 776 Carriage outwards Carriage outwards 326326 Carriage inwards Carriage inwards 234234 Returns Returns 44440 0 335555 Salaries & wages

Salaries & wages 2 4472 447 Motor expenses Motor expenses 664664 Rent Rent 576576 Sundry expenses Sundry expenses 1 2021 202 Motor vehicles Motor vehicles 2 4002 400 Fixtures & fittings

Fixtures & fittings 600600 Debtors & Creditors

Debtors & Creditors 4 4 55777 7 3 3 000000 Provision for bad debts

Provision for bad debts 600600

Prov: for depreciation : Motor vehicle

Prov: for depreciation : Motor vehicle 200200 Fixtures & Fixtures & Fittings Fittings 50 50 Cash at bank Cash at bank 3 8763 876 Cash in hand Cash in hand 120120

Drawings and capital

Drawings and capital 2 2 005500 112 2 663399 Total Total 334 4 884444 334 4 884444 Account balances Account balances DDeebbiit t $$ CCrreeddiit t $$ Capital Capital 50 00050 000

Plant & machinery

Plant & machinery 18 00018 000 Salaries Salaries 8 5008 500 Repairs Repairs 1 6001 600 Wages Wages 28 00028 000 Cash in hand Cash in hand 2 5002 500

Land & buildings

Land & buildings 74 50074 500 Purchases & Sales

Purchases & Sales 1 1 223 3 550000 2 2 449 9 000000 Bank overdraft Bank overdraft 3 8003 800 Discount allowed Discount allowed 1 5001 500 Commission received Commission received 1 5001 500

Provision for bad debt

Provision for bad debt 500500

Debtors & Creditors

Debtors & Creditors 445 5 00000 0 226 6 330000 Discount received

Discount received 8 0008 000

Prov. For depre

Prov. For depreciation : ciation : Plant & machineryPlant & machinery 500500 Land & Buildings

Land & Buildings 1 5001 500 Bad debts

Bad debts 1 0001 000

Stock on 1

Stock on 1stst_{Jan 2001}_{Jan 2001} 37 00037 000 Advertising

Advertising 600600

Office expenses

Office expenses 1 0001 000

Fixtures & fittings

Fixtures & fittings 4 0004 000 Stationery

Stationery 400400

Interest

(9)

Adjustments:-1. The closing

1. The closing stock was valued at stock was valued at $ 30 000$ 30 000

2. Salaries owing amounted to $ 1 500 and repairs outstanding $ 400 2. Salaries owing amounted to $ 1 500 and repairs outstanding $ 400 3. Commission received in advance $ 300

3. Commission received in advance $ 300

4. The provision for bad debts should be at 1% of the year end debtors 4. The provision for bad debts should be at 1% of the year end debtors 5. Depreciate all the fixed assets @ 10% p.a. on cost

5. Depreciate all the fixed assets @ 10% p.a. on cost 6. Rent & rates was

6. Rent & rates was prepaid by $ 200prepaid by $ 200

7. Goods taken by the owner for his personal use not recorded in the books $ 1 000 7. Goods taken by the owner for his personal use not recorded in the books $ 1 000

Q 13.

Q 13. T. Burton is a retailer whose trial balance at 31T. Burton is a retailer whose trial balance at 31ststDec 1999 is Dec 1999 is given below:-given

below:-The following additional information is also

The following additional information is also available:- available:-1. Stock at 31

1. Stock at 31ststDec 1999 was valued at $ 5 200Dec 1999 was valued at $ 5 200 2. General expenses of $ 400 have been paid for the y

2. General expenses of $ 400 have been paid for the year 2000ear 2000 3. A debt of $ 200

3. A debt of $ 200 is to be written off as bad debtis to be written off as bad debt

4. A provision is to be made for doubtful debts of 5% on Debtors at 31

4. A provision is to be made for doubtful debts of 5% on Debtors at 31ststDec 1999Dec 1999 5. Depreciation for 1999 is to

5. Depreciation for 1999 is to be provided as follows:-be provided as follows:-Fixtures & Fittings at 10%

Fixtures & Fittings at 10% using the straight line methodusing the straight line method Motor Vehicles at 20% using the

Motor Vehicles at 20% using the reducing balance methodreducing balance method Required to

Required to prepare:-a.

a.The Trading and Profit & loss account for the year ended 31The Trading and Profit & loss account for the year ended 31ststDec 1999Dec 1999 b.

b.The Balance sheet at 31The Balance sheet at 31ststDec 1999Dec 1999 Incoming search terms:

Incoming search terms:

Rent & rates

Rent & rates 1 5001 500 Bank loan ( long term )

Bank loan ( long term ) 9 5009 500 Total

Total 335500660000 335500660000

Account balances

Account balances Debit Debit $ $ Credit Credit $$ Purchases & Sales

Purchases & Sales 772 2 000000 1 1 119 9 440000 Returns

Returns 750750

Carriage inwards

Carriage inwards 930930

Wages and salaries

Wages and salaries 27 67027 670 General expense General expense 4 7504 750 Cash at bank Cash at bank 4 2104 210 Petty cash Petty cash 150150 Premises Premises 62 52062 520

Fixtures & Fittings

Fixtures & Fittings 9 0009 000 Stock on 1

Stock on 1ststJan 1999Jan 1999 5 5505 550 Trade Debtors &

Trade Debtors & CreditorsCreditors 7 7 22000 0 4 4 885500 Motor Vehicles at cost

Motor Vehicles at cost 13 15013 150 Provision for depreciation on Motor

Provision for depreciation on Motor Vehicles

Vehicles

2 630 2 630 Capital at 1

Capital at 1ststJan 1999Jan 1999 82 50082 500 Drawings

Drawings 3 0003 000

Total

Total 22110 10 13300 22110 10 13 03 0

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