St.

Gabriel’s Secondary School

Principles of Accounts

Term 3_ Class Test 1

Topic 6 ISBS with adjustments 20

Name: ____________________________ ( ) Class: 3E____ Date: 24 July 2019

The following balances were extracted from the books of Mason’s business, MS Trading, a
wholesaler as at 31 March 2019:

Debit Credit
$ $
Capital, 1 April 2018 75 750
Drawings 14 000
Trade receivables 8 400
Trade payables 5 800
Sales revenue 96 500
Sales returns 350
Cost of sales 27 420
Property (lease of 20 years) 104 400
Fixtures and Fittings (cost) 7 900
Accumulated Depreciation on Fixtures and Fittings 2 700
Accumulated Depreciation on Property 16 600
Cash at bank 5 000
Cash in hand 2 340
Wages and salaries 39 000
Rent income 12 000
Insurance 1 200
Commission expenses 2 100
Allowance for impairment of trade receivables 2 500
10% Bank Loan, repayable 2029 10 000
Discounts 400 500
Interest on loan 750
Stationery 750
Inventory 18 340

Additional information

1 Wages of $2 500 was still outstanding.

2 Unused stationery as at 31 March 2019 amounted to $250.

©SGSS/3E/POA/TFY
3 Rent income of $12 000 was received for the 4 months till 30 June 2019.

4 Interest on bank loan was not fully paid.

5 Depreciation on fixtures and fittings is charged at 10% per annum on cost and property has
a lease of only 20 years.

6 No record was made for goods costing $450 withdrawn by Mason for his personal use.

7 No record was made for a cheque of $2 000 paid in full settlement of a debt of $2 100.

8 Based on objective evidence, estimated uncollectible debts amounted to $2 000.

REQUIRED

(a) Prepare the income statement for the year ended 31 March 2019. [10]

(b) Prepare the balance sheet as at 31 March 2019. [10]

©SGSS/3E/POA/TFY
(a) 10 marks

MS Trading
Income statement for the year ended 31 March 2019
$ $
Sales revenue 96 500
Less Sales returns (350)
Net sales revenue 96 150 
Less Cost of sales 27 420
Gross Profit 68 730 

Add Other income

Rent income (12000-9000)  3 000
Discount received (500+100)  600 3 600
Total income 72 330

Less expenses
wages and salaries (39000+2500)  41 500
Insurance 1 200
Commission 2 100
Discount allowed 400
Interest on loan (750+250)  1 000
Stationery (750-250)  500
Depreciation
- Fixtures and fittings 10%(7900)  790
- Property (104400/20)  5 220
Impairment loss on TR (reversal)   (500) 52210
Profit for the year 20120

©SGSS/3E/POA/TFY
(b) 10 marks

MS Trading
Balance sheet as at 31 March 2019
Assets
Net book
Non-current assets Cost Acc Dep value
Property 104 400 21 820 82 580
Fixtures and fittings 7 900 3 490 4 410
Total non-current assets 112 300 25 310 86 990

Current assets
Trade receivables 8 400
Less AFI  (2 000)
Net trade receivables 6 400
Cash in hand 2 340
Inventory (18340-450) 17 890
stock of stationery 250
Total current assets 26 880
Total assets 113 870

Equity and liabilities

Owner's equity
Beginning capital, 1 April 2018 75 750
Add Profit for the year 20 120
Less Drawings (14000+450)  (14 450)
Total equity 81 420

Non-current liability
Long term borrowing 10 000
Total non-current laibility 10 000

Current liabilities
Trade payables (5800-2100) 3700
Short term borrowing (5000+2000) 7000
Accrued wages 2500
Rent received in advance 9000
Accrued interest 250
Total current liabilities 22450
Total equity and liabilities 113870

©SGSS/3E/POA/TFY
©SGSS/3E/POA/TFY