Trade creditors Returns out Provision for doubtful debts Discounts allowed Discounts received Purchases Returns inwards Carriage outwards Drawings Carriage inwards Rent, rates and insurance Heating and lighting Postage, stationery and telephone Advertising Salaries and wages Bad debts Cash in hand Cash at bank Stock as at 1 May 20X6 Trade debtors Fixtures and fittings - at cost Provision for depreciation on fixtures and fittings – as at 30 April 20X7 Depreciation 19,840 13,407 512 2,306 1,750 135,680 5,624 4,562 18,440 11,830 25,973 11,010 2,410 5,980 38,521 2,008 534 4,440 15,654 24,500 120,740 63,020 12,074 The follow additional information as at 30 April 20X7 is available: (a) Stock at the close of business was valued at £17,750. (b) Insurances have been prepaid by £1,120. (c) Heating and lighting is accrued by £1,360. (d) Rates have been prepaid by £5,435. (e) The provision for doubtful debts is to be adjusted so that it is 3% of trade debtors. Required: Prepare Mr Chai's trading and profit and loss account for the year ended 30 April 20X7 and a balance sheet as at that date.
Trade creditors Returns out Provision for doubtful debts Discounts allowed Discounts received Purchases Returns inwards Carriage outwards Drawings Carriage inwards Rent, rates and insurance Heating and lighting Postage, stationery and telephone Advertising Salaries and wages Bad debts Cash in hand Cash at bank Stock as at 1 May 20X6 Trade debtors Fixtures and fittings - at cost Provision for depreciation on fixtures and fittings – as at 30 April 20X7 Depreciation 19,840 13,407 512 2,306 1,750 135,680 5,624 4,562 18,440 11,830 25,973 11,010 2,410 5,980 38,521 2,008 534 4,440 15,654 24,500 120,740 63,020 12,074 The follow additional information as at 30 April 20X7 is available: (a) Stock at the close of business was valued at £17,750. (b) Insurances have been prepaid by £1,120. (c) Heating and lighting is accrued by £1,360. (d) Rates have been prepaid by £5,435. (e) The provision for doubtful debts is to be adjusted so that it is 3% of trade debtors. Required: Prepare Mr Chai's trading and profit and loss account for the year ended 30 April 20X7 and a balance sheet as at that date.
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.
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Transcribed Image Text:28.13
Mr Chai has been trading for some years as a wine merchant. The following list
of balances has been extracted from his ledger as at 30 April 20X7, the end of
his most recent financial year.
Capital
Sales
Trade creditors
Returns out
Provision for doubtful debts
Discounts allowed
Discounts received
Purchases
Returns inwards
Carriage outwards
Drawings
Carriage inwards
Rent, rates and insurance
Heating and lighting
Postage, stationery and telephone
Advertising
Salaries and wages
Bad debts
Cash in hand
Cash at bank
Stock as at 1 May 20X6
Trade debtors
Fixtures and fittings - at cost
Provision for depreciation on
fixtures and fittings - as at 30 April 20X7
Depreciation
£
83,887
259,870
19,840
13,407
512
2,306
1,750
135,680
5,624
4,562
18,440
11,830
25,973
11,010
2,410
5,980
38,521
2,008
534
4,440
15,654
24,500
120,740
63,020
12,074
The following additional information as at 30 April 20X7 is available:
(a) Stock at the close of business was valued at £17,750.
(b) Insurances have been prepaid by £1,120.
(c) Heating and lighting is accrued by £1,360.
(d) Rates have been prepaid by £5,435.
(e) The provision for doubtful debts is to be adjusted so that it is 3% trade
debtors.
Required:
Prepare Mr Chai's trading and profit and loss account for the year ended 30
April 20X7 and a balance
sheet as at that date.
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