Use the following question to answer a question that follows. Lorato and Loago’s Trial Balance as at 31 December 2001 Dr Cr Capital accounts: Lorato 100000 Loago 50000 Current accounts: Lorato 200 Loago 600 Cash drawings for the year: Lorato 15000 Loago 10000 Freehold premises at cost 50000 Inventory at 1 January 2021 75000 Fixtures and Fittings at cost 15000 Purchases and purchase returns 380000 12000 Bank 31600 Sales and sales Returns 6000 508000 Accounts receivables and accounts payables 52400 33300 Carriage inwards 21500 Carriage outwards 3000 Staff salaries 42000 VAT 8700 Office expenses 7500 Provision for doubtful debts 2000 Advertising 5000 Discounts received 1000 Discounts Allowed 1200 Bad debts 1400 Rent and business rates 2800 Accumulated provision for depreciation offixtures and fittings 3000 720000 720000 At 31 December 2021:a. Inventory on hand was valued at P68, 000b. Purchase invoices amounting to P3, 000 for goods included in the stock valuationat (a) above had not been recorded.c. Staff salaries owing P900.d. Business rates paid in advance P200.e. Provision for doubtful debts to be increased to P2, 400.f. Goods withdrawn by partners for private use had not been recorded and werevalued at: Sage P500, Onion P630. No interest is to be charged on these amounts.g. Provision is to be made for depreciation of fixtures and fittings at 10% on cost.h. Interest on drawings for the year is to be charged: Sage P360, Onion P280.

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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Use the following question to answer a question that follows.

Lorato and Loago’s Trial Balance as at 31 December 2001

	Dr	Cr
Capital accounts: Lorato		100000
Loago		50000
Current accounts: Lorato		200
Loago	600
Cash drawings for the year: Lorato	15000
Loago	10000
Freehold premises at cost	50000
Inventory at 1 January 2021	75000
Fixtures and Fittings at cost	15000
Purchases and purchase returns	380000	12000
Bank	31600
Sales and sales Returns	6000	508000
Accounts receivables and accounts payables	52400	33300
Carriage inwards	21500
Carriage outwards	3000
Staff salaries	42000
VAT		8700
Office expenses	7500
Provision for doubtful debts	2000
Advertising	5000
Discounts received		1000
Discounts Allowed	1200
Bad debts	1400
Rent and business rates	2800
Accumulated provision for depreciation of fixtures and fittings		3000
	720000	720000

At 31 December 2021:
a. Inventory on hand was valued at P68, 000
b. Purchase invoices amounting to P3, 000 for goods included in the stock valuation
at (a) above had not been recorded.
c. Staff salaries owing P900.
d. Business rates paid in advance P200.
e. Provision for doubtful debts to be increased to P2, 400.
f. Goods withdrawn by partners for private use had not been recorded and were
valued at: Sage P500, Onion P630. No interest is to be charged on these amounts.
g. Provision is to be made for depreciation of fixtures and fittings at 10% on cost.
h. Interest on drawings for the year is to be charged: Sage P360, Onion P280.

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