2 Booksellers Limited prepared the following trial balance for the year ended 31 December2012:Gross profit for the yearWages and salariesRentHeating and lightingMotor expensesOffice expensesInsuranceDiscount allowedOther expensesInventory at 31 December 2012Trade receivablesProvision for doubtful receivablesBankTrade payablesGoodwillMotor vehicles at costShop fittings at costOffice fittings at costProvision for depreciation on motor vehiclesProvision for depreciation on shop fittingsProvision for depreciation on office fittings5% DebenturesOrdinary share capitalRetained earnings$0001274415501915253374537441764225731$000415415461232019026731 Additional information:1 Wages owing amounted to $23 000 at 31 December 2012.2 Debenture interest for the year had not been paid.3457Bad debts of $5000 were to be written off.The provision for doubtful receivables was to be 5% of trade receivables.Depreciation was provided on motor vehicles at 12%2% on cost and on shop fittings at10% on net book value.Office fittings had been revalued at $19 000.Rent paid in advance was $8000.REQUIRED(a) (i) Prepare a statement of profit and loss for the year ended 31 December 2012.(ii) Prepare a statement of changes in equity for the year ended 31 December 2012.(b) Prepare, in as much detail as possible, a statement of financial position at 31December 2012.

Financial statements are those statements which are prepared at the end of accounting period. The…

Additional information: 1 Wages owing amounted to $23 000 at 31 December 2012. 2 Debenture interest for the year had not been paid. 3 4 5 6 7 Bad debts of $5000 were to be written off. The provision for doubtful receivables was to be 5% of trade receivables. Depreciation was provided on motor vehicles at 12%2% on cost and on shop fittings at 10% on net book value. Office fittings had been revalued at $19 000. Rent paid in advance was $8000. REQUIRED (a) (i) Prepare a statement of profit and loss for the year ended 31 December 2012. (ii) Prepare a statement of changes in equity for the year ended 31 December 2012. (b) Prepare, in as much detail as possible, a statement of financial position at 31 December 2012.

Additional information: 1 Wages owing amounted to $23 000 at 31 December 2012. 2 Debenture interest for the year had not been paid. 3 4 5 6 7 Bad debts of $5000 were to be written off. The provision for doubtful receivables was to be 5% of trade receivables. Depreciation was provided on motor vehicles at 12%2% on cost and on shop fittings at 10% on net book value. Office fittings had been revalued at $19 000. Rent paid in advance was $8000. REQUIRED (a) (i) Prepare a statement of profit and loss for the year ended 31 December 2012. (ii) Prepare a statement of changes in equity for the year ended 31 December 2012. (b) Prepare, in as much detail as possible, a statement of financial position at 31 December 2012.

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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Concept explainers

Bad Debts

At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.

Accounts Receivable

The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.

Question

2 Booksellers Limited prepared the following trial balance for the year ended 31 December
2012:
Gross profit for the year
Wages and salaries
Rent
Heating and lighting
Motor expenses
Office expenses
Insurance
Discount allowed
Other expenses
Inventory at 31 December 2012
Trade receivables
Provision for doubtful receivables
Bank
Trade payables
Goodwill
Motor vehicles at cost
Shop fittings at cost
Office fittings at cost
Provision for depreciation on motor vehicles
Provision for depreciation on shop fittings
Provision for depreciation on office fittings
5% Debentures
Ordinary share capital
Retained earnings
$000
127
44
15
50
19
15
2
53
37
45
37
44
176
42
25
731
$000
415
4
15
46
12
3
20
190
26
731

Additional information:
1 Wages owing amounted to $23 000 at 31 December 2012.
2 Debenture interest for the year had not been paid.
3
4
5
7
Bad debts of $5000 were to be written off.
The provision for doubtful receivables was to be 5% of trade receivables.
Depreciation was provided on motor vehicles at 12%2% on cost and on shop fittings at
10% on net book value.
Office fittings had been revalued at $19 000.
Rent paid in advance was $8000.
REQUIRED
(a) (i) Prepare a statement of profit and loss for the year ended 31 December 2012.
(ii) Prepare a statement of changes in equity for the year ended 31 December 2012.
(b) Prepare, in as much detail as possible, a statement of financial position at 31
December 2012.

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