Chapter 1- Final accounts of sole-trader

Format

Income Statement for the year ended 31^st December 2018
		$	$
Sales / Revenue			****
Less sales return ( return inwards )			(**)
Net sales / Net revenue			****
Less cost of sales:
Opening inventory		****
Purchases / ordinary goods purchased (less drawing of goods)	****
Add Carriage on purchases ( Carriage inwards )	**
Less Purchases return ( return outwards )	(**)	***
Goods available for sales		***
Less Closing inventory		(****)
Cost of sales			(****)
Gross Profit			****
Add other income:
Discount received			**
Decrease in Provision for doubtful debts			**
Interest received			**
Commission received			**
Gross income			****
Less expenses:
Wages and salaries / Insurance / Advertising		***
Increase in Provision for doubtful debts		***
Rent and rates / General / Administrative		***
General / Sundry expenses / Selling & Distribution expenses		***
Discount allowed		***
Carriage on sales ( Carriage outwards )		***
Commission Payable / Bad debts / Bank charges		***
Depreciation on Non Current assets		***
Interest on loan (Finance cost)		***
Total expenses			(***)
Profit for the year			****

Statement of financial position as at 31st December 2018
	$	$
Non Current assets (Cost – Accumulated depreciation)
Property, plant and equipment		***
Fixtures and Fittings		***
Total non current assets		***
Current Assets
Closing inventory	***
Trade receivables	***
Cash and cash equivalents(Cash in hand & bank)	***
Other receivables (Expenses prepaid / paid in advance)	***
Total current assets		***
Total Assets (Total non current assets + Total current assets)		****
Equity
Capital		***
Add Profit for the year		***
Less Drawings		(**)
Capital owned/Owner's capital		***
Non Current liabilities
Loan		***
Capital Employed (Owner’s Capital + Non current liabilities)		***
Current Liabilities
Trade payables	**
Other payables (Expenses due/accrued/outstanding/not yet paid)	**
Bank overdraft (CR)	**
Total current liabilities		**
Equity and Liabilities (Capital employed + Total current liabilities)		****

Q1. The following trial balance was extracted from the books of Eshna on 31st December 2018
	DR	CR
	$	$
Revenue		92200
Inventory-1^st Jan 2018	2950
Purchases	36900
Carriage inwards	1400
Carriage outwards	1500
Return inwards	800
Return outwards		600
Discount allowed	480
Discount received		500
Wages and salaries	3520
Rent and rates	1640
Advertising	2560
Interest paid on bank loan	950
Heat and Light	430
Machinery	44000
Equipment	36000
Fixtures and Fittings	16000
Trade Receivables	19000
Cash and Bank	13600
Trade payables		14430
10% Loan from Bank (2030)		11000
Capital		70000
Drawings	7000
	188730	188730

Additional information
1. Inventory at 31st December 2018 amounted to $ 5 700
2. Wages of $ 600 was not yet paid(outstanding)
3. Rent $ 300 was paid in advance.
4. Advertising $ 400 was prepaid.
5. Heat and light due(accrued) amounted to $ 250
6. Eshna took goods from the business for her own use valued at $ 800.
7. Bank charges amounting to $ 200 was not taken into consideration.
8. Interest on the bank loan was still due.

Required
a) Income statement for the year ended 31st December 2018
b) Statement of financial position as at 31st December 2018

Question 2 and 3

Question 4 and 5