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b) Expenses Unpaid: - Motor Expenses Ghc200 Insurance Ghc450 - Sundry Expenses Ghc400 (c) Prepaid Expenses: - Rates Ghc320 - Sundry Expenses Ghc250 (d) Allowance for receivables to be increased to Ghc2,800 (e) Part of the Premises is sublet at Ghc2,400 per annum (f) Monthly salaries and wages bill Ghc400 (g) Bad debt at 31 December 2019 Ghc600 (h) Loan interest is 5% per annum (i) Provide for depreciation on a straight line method: - Premises 2%; Plant and Machinery 25% - Motor Vehicle 10% G) Write off Preliminary expenses (k) Transfer to general reserves Ghc5,0000 and Ghc5,000 to revenue reserves You are required to: a)Prepare the Income Statement for the year b)Prepare the appropriation Account c)Would you invest in this company base on your answer in (a) ? Give reasons and indicate two benefits that you will gain from such investment (d)Looking at the debtors figure and cash in hand would you say the company is overtrading? Give reasons

b) Expenses Unpaid: - Motor Expenses Ghc200 Insurance Ghc450 - Sundry Expenses Ghc400 (c) Prepaid Expenses: - Rates Ghc320 - Sundry Expenses Ghc250 (d) Allowance for receivables to be increased to Ghc2,800 (e) Part of the Premises is sublet at Ghc2,400 per annum (f) Monthly salaries and wages bill Ghc400 (g) Bad debt at 31 December 2019 Ghc600 (h) Loan interest is 5% per annum (i) Provide for depreciation on a straight line method: - Premises 2%; Plant and Machinery 25% - Motor Vehicle 10% G) Write off Preliminary expenses (k) Transfer to general reserves Ghc5,0000 and Ghc5,000 to revenue reserves You are required to: a)Prepare the Income Statement for the year b)Prepare the appropriation Account c)Would you invest in this company base on your answer in (a) ? Give reasons and indicate two benefits that you will gain from such investment (d)Looking at the debtors figure and cash in hand would you say the company is overtrading? Give reasons

FINANCIAL ACCOUNTING
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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The following Trial Balance was extracted from the books of Johnson Ghana Ltd as at 31* December 2019. Dr Cr GHC GHC Issued and fully paid 20,000 ordinary shares of Ghc1.00 each 20,000 10,000 8,000 3,000 Share Premium General Reserves Income statement Salaries 5,000 Discounts 200 400 Carriage Inwards 160 Purchases and Sales 45,000 91,740 Opening Inventory Carriage Outwards 8,000 560 Loan 24,000 Interest on loan 1,000 Allowance for receivables 2,000 Preliminary Expenses Motor Vehicle expenses 12,000 1,800 6,000 Directors Salaries Repairs to Premises Rates 250 1,600 20,000 23,000 Premises at Cost Motor Vehicles at cost Plant and Machinery at cost Provision for depreciation - Plant and Machinery 25,000 2,500 Debtors and Creditors 12,390 8,000 Sundry Expenses Cash in Hand 3,500 300 4,000 240 170,000 Cash at Hand Returns 360 170,000 Additional Information: a) Inventory at close Ghc12,500
Transcribed Image Text:The following Trial Balance was extracted from the books of Johnson Ghana Ltd as at 31* December 2019. Dr Cr GHC GHC Issued and fully paid 20,000 ordinary shares of Ghc1.00 each 20,000 10,000 8,000 3,000 Share Premium General Reserves Income statement Salaries 5,000 Discounts 200 400 Carriage Inwards 160 Purchases and Sales 45,000 91,740 Opening Inventory Carriage Outwards 8,000 560 Loan 24,000 Interest on loan 1,000 Allowance for receivables 2,000 Preliminary Expenses Motor Vehicle expenses 12,000 1,800 6,000 Directors Salaries Repairs to Premises Rates 250 1,600 20,000 23,000 Premises at Cost Motor Vehicles at cost Plant and Machinery at cost Provision for depreciation - Plant and Machinery 25,000 2,500 Debtors and Creditors 12,390 8,000 Sundry Expenses Cash in Hand 3,500 300 4,000 240 170,000 Cash at Hand Returns 360 170,000 Additional Information: a) Inventory at close Ghc12,500
b) Expenses Unpaid: - Motor Expenses - Insurance - Sundry Expenses Ghc200 Ghc450 Ghc400 (c) Prepaid Expenses: - Rates Ghc320 - Sundry Expenses Ghc250 (d) Allowance for receivables to be increased to Ghc2,800 (e) Part of the Premises is sublet at Ghc2,400 per annum (f) Monthly salaries and wages bill Ghc400 (g) Bad debt at 31 December 2019 Ghc600 (h) Loan interest is 5% per annum (i) Provide for depreciation on a straight line method: - Premises 2%; Plant and Machinery 25% - Motor Vehicle 10% (G) Write off Preliminary expenses (k) Transfer to general reserves Ghc5,0000 and Ghc5,000 to revenue reserves You are required to: a)Prepare the Income Statement for the year b)Prepare the appropriation Account c)Would you invest in this company base on your answer in (a) ? Give reasons and indicate two benefits that you will gain from such investment (d)Looking at the debtors figure and cash in hand would you say the company is overtrading? Give reasons
Transcribed Image Text:b) Expenses Unpaid: - Motor Expenses - Insurance - Sundry Expenses Ghc200 Ghc450 Ghc400 (c) Prepaid Expenses: - Rates Ghc320 - Sundry Expenses Ghc250 (d) Allowance for receivables to be increased to Ghc2,800 (e) Part of the Premises is sublet at Ghc2,400 per annum (f) Monthly salaries and wages bill Ghc400 (g) Bad debt at 31 December 2019 Ghc600 (h) Loan interest is 5% per annum (i) Provide for depreciation on a straight line method: - Premises 2%; Plant and Machinery 25% - Motor Vehicle 10% (G) Write off Preliminary expenses (k) Transfer to general reserves Ghc5,0000 and Ghc5,000 to revenue reserves You are required to: a)Prepare the Income Statement for the year b)Prepare the appropriation Account c)Would you invest in this company base on your answer in (a) ? Give reasons and indicate two benefits that you will gain from such investment (d)Looking at the debtors figure and cash in hand would you say the company is overtrading? Give reasons
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