MARK MARTIN

Mark Martin decides to set up a small business as a sole trader. At the end of the first
week of business, the following transactions have occurred:

1/1 Mark invested £500 cash into the business and borrowed £500 from his local bank.
All this money was placed into the business bank account.
1/1 70 units of stock were bought at £10 each, paid for by cheque, and another 200
units were bought on credit. All stock was purchased from Naff Products.
2/1 Rent on a market stall of £200 was paid by cheque for the whole week.
2/1 200 units of stock were sold to Jim for £13 each. Jim paid by cheque.
2/1 A cheque for £750 was spent on posters advertising the new stall.
3/1 A sale of 75 units of stock was made to Sally who paid by cheque.
4/1 Mark bought 230 units of stock on credit from Naff Products.
5/1 175 units of stock were sold to Samantha for which £500 is still owed.
6/1 £150 was paid to John for covering the stall when Mark was taking breaks and half
of the debt to Naff products was paid off, both from the bank account.
7/1 £55 has been paid to the local bank. £50 is part repayment of the loan and the
remainder is the interest charge for the loan.

Assume that purchase and selling prices per unit remain constant. A stock take reveals
there are 50 units of stock left at the end of the week.

Required:
Record these transactions into a double entry system and draw up the trial balance.

Show Mark's financial position at the end of the week (balance sheet) and also his income
(profit).
 JANET FAIRBRASS

Janet Fairbrass is a sole trader who runs a business called “Skin Deep” which sells beauty
products. The business commenced trading on 1 May 2009 and has a year end of 30 April.
Janet likes to keep a regular check on her accounts and constructs a trial balance at the end of
every month. The following is the trial balance for 31 March 2022:

£ £
Bank 6,850
Capital 24,695
Cash 350
115,68
Sales 5
Purchases 31,600
Beauties R Us 650
Joanna 150
Peter 75
Rent 14,300
Drawings 27,000
Furniture and Fittings 15,500
Admin. expenses 20,985
Wages 16,500
Stock as at 1/5/21 7,720  
141,03
141,030 0

During the month of April 2022, the following transactions took place:
1 April Janet buys more stock from Beauties R Us on credit for £1,800 and she pays a
cheque for £1,300 for the monthly rental of the shop.
2 April Janet receives all that she is owed by Joanna in cash and £35 cash from Peter.
First week Cash sales for the first week of April total £2,530 and during this period £2,500
cash is paid into the bank account.
8 April Janet makes a £30 sale to Peter who owes the total amount for the goods and a
credit sale to Joanna of £85.
Second week Cash sales for the second week of April total £3,420. During this period, no cash
was paid into the bank account as Janet did not have time to visit the bank.
Third week Cash sales for the third week of April total £2,975 and during this period £6,300
cash is paid into the bank account.
25 April Janet pays Beauties R Us £2,000 by cheque
27 April A customer returns an opened product and is given a cash refund of £45
Final week Cash sales for the final week total £3,055 and during this period £3,250 cash is
paid into the bank account
30 April Janet uses internet banking to pay the monthly wage of £1,500 to her part-time
employee, to transfer £2,300 to her own personal bank account and to pay
administration bills which total £950.
A stock take reveals £6,505 of stock left at the end of the month.

REQUIRED:
(i) Enter appropriate opening balances into the accounts, and using only the T-accounts
available, record all the transactions that occurred during the month of April 2022.
Balance off the accounts at the end of April 2022, transferring appropriate items to the
trading & profit & loss account. NOTE: you are not required to do the trading & profit &
loss ‘T’ account or to transfer drawings to the capital account.
(ii) Prepare a trial balance for the end of April 2022 and then construct a profit and loss
account for the year ended 30 April 2022, and a balance sheet at that date.