prepare a trading profit and loss account Use the following information to answer questions 1 – 18 (CLO 1) The following Trial Balance was extracted from the books of Johnny Smith, a sole trader on December 31, 2014: Trial Balance as at December 31, 2014 Details/Accounts $ $ Return inwards 100,000 Cash 150,000 Accounts receivable 3,250,000 Salaries 1,800,000 Motor vehicle repairs 185,000 Insurance 75,000 Return outwards 70,000 Cash drawings 250,000 Bank 140,000 Bad debts 132,500 Sales 9,600,000 Discount allowed 155,000 Machinery 2,750,000 Accumulated depreciation on machinery 412,500 Stock, January 1, 2014 1,500,000 Commission received 150,000 Carriage inwards 125,000 Electricity 480,000 Furniture and fittings 900,000 Purchases 3,820,000 Discount received 240,000 Stationery 200,000 Capital 5,495,000 Motor vehicles 2,500,000 Provision for depreciation on motor vehicles 250,000 Accounts payable 2,100,000 Rent 210,000 Provision for bad and doubtful debts 125,000 18,582,500 18,582,500 Notes: (i) Stock on December 31, 2014 was valued at $2,000,000. (ii) Commission receivable amounting to $75,000 was not entered to the account as at December 31, 2014. (iii) Carriage inwards of $25,000 was owed at the end of the accounting period. (iv) On December 31, 2014 Johnny Smith paid the amount of $40,000 for stationery to be received during the next year. (v) The provision for bad and doubtful debts is to be adjusted to 5% of accounts receivable. (vi) Depreciation is to be charged as follows: Machinery 10% pa. straight line; Furniture and fittings 10% pa. straight line method; and motor vehicles 20% pa reducing balance. solve with everything thanks
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
prepare a trading
Use the following information to answer questions 1 – 18 (CLO 1)
The following
Trial Balance as at December 31, 2014
|
Details/Accounts |
$ |
$ |
|
Return inwards |
100,000 |
|
|
Cash |
150,000 |
|
|
|
3,250,000 |
|
|
Salaries |
1,800,000 |
|
|
Motor vehicle repairs |
185,000 |
|
|
Insurance |
75,000 |
|
|
Return outwards |
|
70,000 |
|
Cash drawings |
250,000 |
|
|
Bank |
|
140,000 |
|
|
132,500 |
|
|
Sales |
|
9,600,000 |
|
Discount allowed |
155,000 |
|
|
Machinery |
2,750,000 |
|
|
|
|
412,500 |
|
Stock, January 1, 2014 |
1,500,000 |
|
|
Commission received |
|
150,000 |
|
Carriage inwards |
125,000 |
|
|
Electricity |
480,000 |
|
|
Furniture and fittings |
900,000 |
|
|
Purchases |
3,820,000 |
|
|
Discount received |
|
240,000 |
|
Stationery |
200,000 |
|
|
Capital |
|
5,495,000 |
|
Motor vehicles |
2,500,000 |
|
|
Provision for depreciation on motor vehicles |
|
250,000 |
|
Accounts payable |
|
2,100,000 |
|
Rent |
210,000 |
|
|
Provision for bad and doubtful debts |
|
125,000 |
|
|
18,582,500 |
18,582,500 |
Notes:
(i) Stock on December 31, 2014 was valued at $2,000,000.
(ii) Commission receivable amounting to $75,000 was not entered to the account as at December 31, 2014.
(iii) Carriage inwards of $25,000 was owed at the end of the accounting period.
(iv) On December 31, 2014 Johnny Smith paid the amount of $40,000 for stationery to be received during the next year.
(v) The provision for bad and doubtful debts is to be adjusted to 5% of accounts receivable.
(vi) Depreciation is to be charged as follows: Machinery 10% pa. straight line; Furniture and fittings 10% pa.
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