Chapter 1- Final accounts of sole-trader


Format

Income Statement for the year ended 31st 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-1st 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