QUESTION 1

Dr Cr
1. General Ledger 2. Trial Balance 31 July 2019
Dr Cr
Cash Cash $ 1,900.00 James $ 19,850.00
01-Jul-19 $ 20,000.00 02-Jul-19 $ 18,000.00 Bank $ 16,530.00 Purchases Returned $ 200.00
23-Jul-19 $ 1,500.00 05-Jul-19 $ 500.00 Rent $ 500.00 Sales $ 2,500.00
31-Jul-19 $ 50.00 09-Jul-19 $ 1,000.00 Equipment $ 250.00 Discount Received $ 180.00
Bal. c/f 01/08/19 $ 1,900.00 31-Jul-19 $ 150.00 Purchases $ 3,000.00
Sales Returned $ 500.00
James Discount Allowed $ 50.00
31-Jul-19 $ 150.00 01-Jul-19 $ 20,000.00 $ 22,730.00 $ 22,730.00
Bal. c/f 01/08/19 $ 19,850.00

Bank
02-Jul-19 $ 18,000.00 06-Jul-19 $ 300.00
31-Jul-19 $ 450.00 31-Jul-19 $ 1,620.00
Bal. c/f 01/08/19 $ 16,530.00

Rent
05-Jul-19 $ 500.00
Bal. c/f 01/08/19 $ 500.00

Equipment
06-Jul-19 $ 300.00 31-Jul-19 $ 50.00
Bal. c/f 01/08/19 $ 250.00

Purchases
09-Jul-19 $ 1,000.00
10-Jul-19 $ 2,000.00
Bal. c/f 01/08/19 $ 3,000.00

Seddon Creditor
20-Jul-19 $ 200.00 10-Jul-19 $ 2,000.00
31-Jul-19 $ 1,800.00
Bal. c/f 01/08/19 $ -

Purchases Returned
20-Jul-19 $ 200.00
Bal. c/f 01/08/19 $ 200.00

Sales
23-Jul-19 $ 1,500.00
26-Jul-19 $ 1,000.00
Bal. c/f 01/08/19 $ 2,500.00

Sales Returned
28-Jul-19 $ 500.00
Bal. c/f 01/08/19 $ 500.00

Frodsham Debtor
26-Jul-19 $ 1,000.00 28-Jul-19 $ 500.00
31-Jul-19 $ 500.00
Bal. c/f 01/08/19 $ -

Discount Received
31-Jul-19 $ 180.00
Bal. c/f 01/08/19 $ 180.00

Discount Allowed
31-Jul-19 $ 50.00
Bal. c/f 01/08/19 $ 50.00
QUESTION 2

Dr Cr
1. Statement of Profit for the year ended 31 December 2019
Purchases € 65,000.00 Sales € 150,000.00
Sales returns € 1,240.00 Purchase returns € 1,000.00
Inventory 1/1/2019 € 8,800.00 Discounts received € 380.00
Carriage Inwards € 2,000.00 Inventory 31/12/2019 € 9,000.00
Discounts allowed € 470.00
Rent and rates € 3,970.00
Lighting and heating € 2,590.00
Insurance € 610.00
Salaries and wages € 17,800.00
Sundry expenses € 700.00
Telephone € 1,300.00
Carriage outwards € 1,100.00
Bad Debts € 700.00
Depreciations € 5,000.00
Profit for the year € 49,100.00

Dr Cr
Statement of Financial Position at 31 December 2019
Non-Current Assets Equity
Fixed Assets
Fixtures and fittings € 31,000.00 Capital € 25,000.00
Provision for depr. F&F -€ 5,000.00 Retained earings € 49,100.00
Motor vehicles € 24,000.00
Provision for depr. MV -€ 7,000.00
Total € 43,000.00 Total € 74,100.00

Current Assets Current Liabilities

Accounts receivable € 15,600.00 Accounts payable € 15,410.00
Cash at bank € 4,000.00 Acrruals € 1,250.00
Cash in hand € 1,050.00 Provision for Bad Debts € 300.00
Drawings € 18,000.00
Inventory € 9,000.00
Prepayments € 410.00
Total € 48,060.00 Total € 16,960.00

Total Assets € 91,060.00 Total Liabilities € 91,060.00

QUESTION 3

1.
Accruals:
Accruals are the expenses of current periods but are paid in other future periods.
1. Electricity is paid after the period for which is paid passed (November-December is paid January).
2. Telephone is paid usualy one month after the period for which is paid (December is paid January).
3. Rent sometimes is paid the next month for which it is paid (December is paid January).

Prepayments:
Prepayments are the expenses paid before, in current periods but are for other future periods.
1. Sometimes suppliers are paid before for something they will provide in future periods (Goods/services
provided in January 2019 are paid in 2018).
2. Insurance is paid usualy before for the period for which it covers (January-December 2019 is paid in 2018).
3. Rent sometimes is paid the before the month for which it is paid (January is paid in December).

2. a)
Current Assets
Current Assets are the things owned by the company who are to be used in the next 12 months, like inventory,
cash, receivables, prepayments etc.

Non-Current Assets
Non-Current Assets are the things owned by the company who are to be used in periods more than the next 12
months, like motor vehicles, furniture, buldings etc.

b)
Current Liabilities
Current Liabilities are the things that the company owes to others who are to be settled in the next 12 months,
like accruals, payables, bank overdraft etc.

Non-Current Liabilities
Non-Current Liabilities are the things that the company owes to others who are to be settled in periods more
than the next 12 months, like loan payable in 10 years etc.

b)

These distinctions are useful because they help categorize the assets and liabilities of a company to those within
the next 12 months and those for more than 12 months. This is good as it provides information within some set
periods and what is expected to be paid or received in these future periods, in order to understand the financial
position of the company in set time periods and how good or bad it does or how it may do in the future.