DONEIn each case, identify and then explain the main accounting concepts being highlighted andindicate how each should be treated in the final accounts.7Question FourThe following trial balance was extracted from the books of Red Colours at the close of businesson 29 February 2016.Purchases and salesCash at bankCash in handCapital account 1 March 2015DrawingsOffice furnitureRentPurchase>92,800157, 165DrKshs.92,8004,10032417,1002,9003,400CrKshs.157,16511,400 Wages and salariesDiscountsDebtors and creditorsStock 1 March 2015Provision for doubtful debts 1 March 2015Delivery VanVan running costsBad debts written off31,40082012,3164,1203,750615b.730174,375174,3751605,245Additional information.(a) Stock 29 February 2016 was Kshs. 2,400.(b) Wages and salaries accrued at 28 February 2016 was Kshs. 340. Add(c) Rent prepaid at 29 February 2016 was Kshs. 230. Add(d) Van running costs owing at 29 February 2016 Kshs. 72. Add(e) Increase the provision for doubtful debts by Kshs. 91. 405 +91(f) Provide for depreciation as follows: Office furniture Kshs. 380; Delivery van Kshs. 1,250.Required to Prepare:Balance Sheet (Statement of Financial position) as at that date.405a. Trading and profit and loss account (Income Statement) for the year ended 29 February2016.

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(a) Stock 29 February 2016 was Kshs. 2,400. (b) Wages and salaries accrued at 28 February 2016 was Kshs. 340. Add (c) Rent prepaid at 29 February 2016 was Kshs. 230. Add (d) Van running costs owing at 29 February 2016 Kshs. 72. Add (e) Increase the provision for doubtful debts by Kshs. 91. 405+91 (f) Provide for depreciation as follows: Office furniture Kshs. 380; Delivery van Kshs. 1,250. Required to Prepare: Trading and profit and loss account (Income Statement) for the year ended 29 February 2016. b. Balance Sheet (Statement of Financial position) as at that date.

(a) Stock 29 February 2016 was Kshs. 2,400. (b) Wages and salaries accrued at 28 February 2016 was Kshs. 340. Add (c) Rent prepaid at 29 February 2016 was Kshs. 230. Add (d) Van running costs owing at 29 February 2016 Kshs. 72. Add (e) Increase the provision for doubtful debts by Kshs. 91. 405+91 (f) Provide for depreciation as follows: Office furniture Kshs. 380; Delivery van Kshs. 1,250. Required to Prepare: Trading and profit and loss account (Income Statement) for the year ended 29 February 2016. b. Balance Sheet (Statement of Financial position) as at that date.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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