Financial Statements for sole trader (Income Statement and Statement of Financial

Position)
Assignment Questions

1 The following trial balance was taken from the books of a sole trader for the year ended
31st Dec 2018:-

Account balances Debit $ Credit $

Purchase & sales 92 300 1 90 300
Carriage inwards 5 200
Drawings 5 000
Rent, rates & insurance 4 500
Postage 3 000
Stationery 2 700
Capital 59 400
Machinery 55 000
Buildings 45 000
Furniture & Fittings 15 000
Debtors/ trade receivables & Creditors/ 14 500 13 200
trade payables
Commission received 7 000
Opening Inventory 1 000
Cash at bank 2 500
Cash in hand 1 800
Discounts 250 3 920
Bad debt 800
Salaries & Wages 22 120
Advertising 1 850
Carriage outwards 1 200
Returns in & out 800 700
Total 2 74 520 2 74 520

Consider the following points at 31st December 2018:-

1. The closing Inventory was valued at $ 12 400

2. Rent, rates & insurance was owing by & 500.
` 3. Commission received in advance is $ 1 000.
4. Salaries & wages owing $ 880.
5. Advertisement expense is prepaid by $ 350.
6. Carriage inwards payable $ 800.
From the above information, you are required to prepare at 31st December 2018:-
a. Income statement (profit and loss account)
b. Statement of Financial position (Balance sheet)
Financial Statements for sole trader (Income Statement and Statement of Financial
Position)
2. The following account balances were extracted from the books of a sole trader
for the year ended 31st December 2017:-

Stock on 1st Jan 2017 12 300 Purchases 1 25 000

Sales 1 58 000 Discount received 2 400
Rent paid 7 000 Fixture & fittings 13 500
Motor Car 10 500 Advertising 1 960
Motor van expenses 1 120 Heating & lighting 1 200
Wages to assistant 6 000 Accountant’s fee 1 200
Insurance 700 Debtors 3 100
Creditors 2 700 Cash in hand 250
Bank overdraft 3 840 Bank charges 270
Drawings 9 000 Interest received 1 400
Capital 27 210 License & taxes 500
Carriage inwards 1 000 Carriage outwards 950

The following points are to be considered at 31 st Dec 2017:-

1) The closing stock was valued at $ 10 500 2) Rent prepaid was $ 1 000
3) Motor van expenses owing $ 200 4) Interest earned but not received $ 600
5) Wages to assistant outstanding $ 1 200 6) License and taxes payable $ 300

From the above information, you are required to prepare:-

a. Income statement (profit and loss account) for the year ended 31st Dec 2017
b. Statement of Financial position (Balance sheet) at 31st Dec 2017.
Financial Statements for sole trader (Income Statement and Statement of Financial
Position)
3. The following trial balance had been taken from the books of a sole trader for the year ended
31st Dec 2019:-

Account balances Debit $ Credit $

Purchases & sales 70 000 1 46 000
Returns in & out 1 500 1 600
Carriage inwards 6 000
Carriage outwards 3 000
Discount received 6 100
Telephone charges 2 000
Rent paid 700
Advertisement 1 100
Debtors & Creditors 7 700 2 000
Bank loan 10 000
Cash in hand 3 750
Power charges 1 000
Salaries & wages 12 000
Premises at cost 40 000
Plant at cost 35 000
Machinery at cost 15 000
Motor car at cost 38 000
Capital 75 800
Drawings 1 250
Stock on 1-1-2019 3 500
Total 2 41 500 2 41 500
Additional information:-
1. The stock on 31st Dec 2019 was valued at $ 4 750
2. Power charges unpaid at 31st Dec 2019 was $ 2 000
3. Salary paid in advance at 31st Dec 2019 was $ 3 000
4. depreciate all the fixed assets @ 10 % p.a. on cost
5 Provide the provision for bad debts at $ 500
From the above information, you are required to prepare at 31st December 2019:-
a. Income statement (profit and loss account)
b. Statement of Financial position (Balance sheet)
Financial Statements for sole trader (Income Statement and Statement of Financial
Position)

4. The following trial balance was taken from the books of a sole trader for the
Year ended 31st March 2014:-

Account balances Debit $ Credit $

Opening stock 2 000
Purchases and Sales 25 600 44 600
Carriage inwards 1 400
Stationery 500
Debtors & Creditors 8 000 6 000
Plant & Machinery 10 000
Buildings 11 000
Furniture 4 000
Repairs to building 1 000
Carriage out 1 600
Salaries & wages 9 800
Office expenses 200
General expenses 2 500
Drawings & Capital 2 500 30 700
Cash in hand 1 200
Interest paid 200
Discount allowed & received 2 100 3 000
Commission paid 200
Rent & rates 1 500
Returns 200 500
Bank 700
Total 85 500 85 500
Notes:-
1. The stock on 31-3-2014 was valued at $ 4 200
2. Salaries & wages owing for the year ended 31 st March 2014 was $ 1 200
3. 2.5% of the debtors should be written off as bad debt
4. Provide provision for depreciation on all the fixed assets @ 10% p.a.
5. Rent & rates paid in advance $ 200
6 The owner had taken goods costing $ 600 for his own use not entered in the books of the
business

Required prepare :-

a. The Income statement (trading and profit & loss account) for the year ended 31st March
2014.
b. Statement of Financial Position (balance sheet) at 31st March 2014.
Financial Statements for sole trader (Income Statement and Statement of Financial
Position)

5 Following is the trial balance extracted from the books of Mr. Young, a sole trader, for the
Year ended 31st Dec 2016:-

Account balances Debit $ Credit $

Capital on 1st Jan 2016 37 470
Debtors & Creditors 1 500 250
Premises 50 000
Loan ( payable after 5 years) 10 000
Furniture & Equipment at cost 10 000
Provision for depreciation on Furniture& 4 000
equipment

Cash in hand 120

Maintenance cost of equipment 750
Stock on 1-1-2002 1 500
Drawings 12 000
Rates 1 100
Heating & lighting 1 300
Postage &telegram 1 250
Repairs to premises 1 400
Purchases and sales 14 000 45 000
Wages 1 800
Total 96 720 96 720

Prepare Income Statement for the year ended 31st Dec 2016 and Statement of financial Position
as at that date after taking into account the following:-

1. The closing stock was valued at $ 2 700

2. Heating & lighting unpaid at 31-12-16 was $ 250
3. Depreciate furniture & equipment by 10% on cost.
4. Rates paid in advance at the yearend was $ 100
5. Interest on loan for the whole year @ 10% p.a. is outstanding