The financial affairs of Newbegin Tools prior to the commencement of trading were as follows at 01.08.

20

DR CR
$ '000 $ '000

Assets

NCA
Motor Vehicles 2000
Shop Fittings 3000

Current Assets
Inventories 12000
Cash 1000

Capital 12000

Current Liabilities
Bank overdraft 2000
Trade Payables 4000

Total 18000 18000

1. Prepare Statement of Profit or Loss for year ended 31.01.2006

2. Prepare Statement of Financial Position for year ended 31.01.2006
ing were as follows at 01.08.2005 Additional Information

1. Goods were purchased on credit at a list price of 10000.

2. Trade Discount received was 2% on list price and there was a settlement disc

3. Closing Inventories of goods were valued at $5450.

4. All sales were on credit and amounted to $27250.

5. Receivables at 31. 01. 2006 were $3250 of which $250 were to be written off. A

6. Cash payments consist of following expenses:

A. Stationery, postage and wrapping

B. Telephone charges
C. Electricity
D. Cleaning and refreshments

7. Cash Drawings by proprietor were amounted to $6000.

8. Overdraft balance at 01.08.2005 was paid off. Interest charges and bank charges
nd there was a settlement discount received of 5% on settling debts to suppliers of $8000. These were the only payments to suppliers in th

$250 were to be written off. Allowance was 2% of the gross receivables.

$
500
200
600
150

rest charges and bank charges on the overdraft amounted to $40.

nly payments to suppliers in the period.
 SPL for Newbegin Tools, sole trader, for year ended 01.08.2005

DR
$ '000

Sales Revenue
Cost of Sales
Gross Profit

Expenses

Stationery, postage and wrapping 500

Telephone charges 200
Electricity 600
Cleaning and refreshments 150
Irrecoverable Debts 250
Allowance for the receivables 60
Interest and Bank charges 40

Profit for the period

01.08.2005 Workings :

CR 1. Cost of Sales
$ '000
Opening Inventory 12000
27250 Purchase 9800
15950 Discount Received -400
11300 Closing Inventory -5450

Cost of Sales 15950

1800

9500
10000 * 98%
8000 * 5%
 SOFP for Newbegin Tools, sole trader, for year ended 01.08.2005

$ '000 $ '000

Assets

NCA
Motor Vehicle 2000
Shop Fittings 3000
5000
Current Assets
Inventory 5450
Trade Receivables 2940
Cash 7910
16300

Total Assets 21300

Capital and Liabilities

Capital

Opening Capital 12000

Profit for the period 9500
- Drawings 6000
15500
Current Liabilities
Trade Payables 5800
5800

Totatl Equity and Liabilities 21300

 Workings :

1. Trade Receivables

Opening Balance 27250

Cash Received 24000 -
Irrecoverable Debt 250 -
Allowance for receivables 60 -

Total Trade Receivables 2940

2. Cash

Opening Balance 1000

Cash received 24000 +
Cash Paid
Trade Payables 7600 -
Stationery, postage and wrapping 500 -
Telephone charges 200 -
Electricity 600 -
Cleaning and refreshments 150 -
Bank and interest charge 40 -
Bank overdraft repaid 2000 -
Drawings by proprietor 6000 -

Total Cash Balance 7910

3. Trade Payables

Balance in the beginning 4000

Purchase on credit 9800
Discount Received -400
Payments -7600

Total Trade Payables 5800

 The trial balance of Ice, an entity, as at 31.12.2001 is presented below.

Sales Revenue
Purchases
Administrative Expenses
Distribution Expenses
Plant and Machinery – Cost
Plant and Machinery – Accumulated Depreciation at 1 January 20X1
Trade Receivables
Allowance for Receivables – 1 January 20X1
Inventory – 1 January 20X1
Capital
Trade Payables
Retained Earnings – 1 January 20X1
6% Loan – Repayable 31 December 20X4
Cash

Total Balances

1. Prepare Statement of Profit or Loss for year ended 31.12.2001

2. Prepare Statement of Financial Position for year ended 31.12.2001
2001 is presented below. Additional Information

DR CR 1. It has been determined that trade receivables o

$ $ No adjustment is required to the allowance for rec

600,000 Dr Ir. Expense

240,000 Cr Receivables
185,000
75,000 2. Depreciation on plant and machinery is charged
120,000 Depreciation is charged to cost of sales.
15,000
20,500 Dr Depreciation Expense
2000 Cr Accumulated Depreciation
24,000
5,000
29,000 3. The loan was taken out on 1 April 20X1. No inter
43,500
100,000 Dr Interest Expense
130,000 Cr Interest Payable

794,500 794,500 4. Closing inventory has been correctly valued at $

5. A customer bought goods on credit from Ice for

They returned these goods on 30 December 20X1.
No entries have been posted for this return.

Dr Sales Return
Cr Receivables

6. Ice is being sued by an ex-employee for unfair d

Legal advisers think it is probable that Ice will lose
Legal costs are charged to administrative exp

Dr Provision Expense
Cr Provision Payable

7. The current year tax bill has been estimated at $

Dr Tax Expense
Cr Tax Payable
ed that trade receivables of $1,000 are irrecoverable.
ed to the allowance for receivables.

1000 SPL
1000 SOFP

and machinery is charged at 20% per annum on a reducing balance basis.

to cost of sales.

21000 Cost of Sales

Depreciation 21000

ut on 1 April 20X1. No interest has been accrued.

4500 SPL 6000/12*9= 4500 6000 12ay

4500 SOFP X 9ay

been correctly valued at $30,000.

oods on credit from Ice for $500 on 10 December 20X1.

ods on 30 December 20X1.
osted for this return.

500 SPL
500 SOFP

n ex-employee for unfair dismissal.

probable that Ice will lose the case and that they will have to pay damages of $50,000 in 20X2.
rged to administrative expenses.

50000 SPL Administrative Expense

50000 SOFP

bill has been estimated at $6,000.

6000
6000
 SPL for ICE, sole trader, for year ended 31.01.2001

Sales Revenue 599500

Cost of Sales 255000
Gross Profit 344500

Expenses

Administrative Ex. 236000

Distribution costs 75000

Operating Profit EBIT/PBIT 33500

Finance Cost or Interest Expense 4500

Profit Before Tax EBT/PBT 29000

Tax Expense 6000

Profit for the year 23000

Additional Information
Retained Earnings in the beginning 43500

Total Retained Earnings 66500

EBITDA = Earnings before Interest ex., Tax ex., Depreciation ex., Amortisation ex.
 Workings :

1. Cost of Sales

Opening Inventory 24000

Purchase 240000
Depreciation 21000
Closing Inventory -30000

Cost of Sales 255000

EBITDA 2. Administrative Expenses

EBIT
EBT Balance in the trial balances 185000
Irrecoverable Debts 1000
Provision 50000

Total Administrative Expenses 236000

PAT/EAT/Net profit
+
+
(120,000-15000) * 20% +
-
 SOFP for ICE, sole trader, for year ended 31.12.2001

$ '000 $ '000

Assets

NCA
Property, plant and equipment 84000
84000

Current Assets
Inventory 30000
Net Receivables 17000
Cash 130000
177000

Total Assets 261000

Capital and Liabilities

Capital

Capital 5000
Retained Earnings 66500

71500

Non-Current Liabilities
Loan 100000
100000

Current Liabilities
Trade Payables 33500
Tax Payable 6000
Provision 50000
89500

Totatl Equity and Liabilities 261000

 Workings :

1. Trade Receivables

Balance on trial balance 20500

Sales Return 500 -
Irrecoverable Debt 1000 -
Allowance for receivables 2000 -

Total Trade Receivables 17000

3. Trade Payables

Balance in the beginning 29000

Interest Payable 4500 +

Total Trade Payables 33500

 Markus has prepared a trial balance for his business at 30 April 20X3 whic

Sales
Purchases
Administrative Expenses
Distribution Expenses
Plant and Machinery – Cost
Plant and Machinery – Accumulated Depreciation at 1 May20X2
Trade Receivables
Allowance for Receivables – 1 May 2002
Inventory – 1 May 2002
Equity Capital - 1 May 2002
Trade Payables
Drawings
6% Loan – Repayable 31 December 20X6
Cash
Finance Cost

Total Balances

1. Prepare Statement of Profit or Loss for year ended 30 April 2003

2. Prepare Statement of Financial Position for year ended 30 April 2003
business at 30 April 20X3 which is presented below. Additional Informa

1. Markus took goods w

DR CR but this has not been re
$ $
Dr
230,000 Cr
90,000
65,800 2. It has been determin
31,200 In addition, it was decid
72,000
25,000 Dr
20,000 Cr
3150
18,750 3. Depreciation on plan
30,000 balance basis. Deprecia
17,500
18,000 Dr
3,000 Cr
7,400
300 4. The loan was taken o

316,050 316,050 Dr
Cr

5. Closing inventory ha
some items of inventor

17500-5000+3750= 1

6. At 30 April 20X3, a p
Insurance is classified a

Dr
Cr

7. At 30 April 20X3, an
Freight and delivery ex

Dr
Cr
 Additional Information

1. Markus took goods which cost $5,000 for personal use during the year,
but this has not been recorded.

Drawings 5000
Purchase 5000

2. It has been determined that trade receivables of $600 are irrecoverable.

In addition, it was decided that the allowance for receivables should be reduced by $500.

Ir. Debts 600 Dr Allowance 500

Receivables 600 Cr Ir. Debt ex 500

3. Depreciation on plant and machinery is charged at 15% per annum on a reducing

balance basis. Depreciation is charged to cost of sales.

Depreciation 7050 Cost of Sales

Accumulated Dep 7050

4. The loan was taken out on 1 August 20X2 and interest has not yet been paid or accrued.

Interest Expense 135 180/12*9=135

Interest Payables 135

5. Closing inventory had been valued at $17,500. It was subsequently discovered that
some items of inventory which had cost $5,000 had a net realisable value of $3,750.

17500-5000+3750= 16250

6. At 30 April 20X3, a prepayment for insurance paid in advance of $400 had not yet been accounted for.
Insurance is classified as an administrative expense.

Prepayment 400 Administrative expense

Expense 400

7. At 30 April 20X3, an accrual for freight and delivery expenses amounting to $350 had not yet been accounted for.
Freight and delivery expenses are classified as distribution expenses.

Expense 350 Distribution Expense

Accrual 350
 Prepayment

Step 1

Dr Expense 100000
Cr Cash 100000

Step 2

Dr Prepayment 40000
Cr Expense 40000

Step 3

Dr Expense 40000
Cr Prepayment 40000
 SPL for Markus, sole trader, for year ended 30.04.2003

DR CR
$ '000 $ '000

Sales Revenue 230000

Cost of Sales 94550
Gross Profit 135450

Expenses

Administrative Ex. 65500

Distribution costs 31550

Operating Profit PBIT 38400

Finance Cost or Interest Expense 435

Profit for the year PAT 37965

 Workings :

1. Cost of Sales

Opening Inventory 18750

Purchase 85000
Depreciation 7050
Closing Inventory -16250

Cost of Sales 94550

2. Administrative Expenses

Balance in the beginning 65800

Irrecoverable Debts 600
Decrease in allowance -500
Prepaid Insurance -400

Total Administrative Expenses 65500

3. Distribution Cost

Opening Balance 31200

Freight and Delivery accrual 350

Total Distribution Cost 31550

90000 - 5000
(72000 - 25000) * 15%
17500 - ( 5000 - 3750 )
 SOFP for Markus, sole trader, for year ended 30.04.2003

$ '000 $ '000

Assets

NCA
Property, plant and equipment 39950
39950

Current Assets
Inventory 16250
Trade Receivables 16750
Prepayment 400
33400

Total Assets 73350

Capital and Liabilities

Capital

Capital in Trial Balance 30000

+ Profit for the year 37965
- Drawings 18000
- Goods Drawings 5000
44965

Non-Current Liabilities
Loan 3000
3000

Current Liabilities
Trade Payables 17635
Accrual 350
Bank Overdraft 7400
25385

Totatl Equity and Liabilities 73350

 Workings :

1. Trade Receivables

Balance in Trial balance 20000

Irrecoverable Debt 600 -
Reduction in Allowance 500 +
Allowance for receivables 3150 -

Net Trade Receivables 16750

3. Trade Payables

Balance in the beginning 17500

Interest Payable 135 +

Total Trade Payables 17635

3. Plant, Property and Equipment

At cost 72000
Accumulated Depreciation 25000 -
Depreciation Expense 7050 -

Total PPE 39950

 Carbon has prepared a trial balance for his business at 30 April 20X3 which

DR
$

Revenue
Purchases 180,000
Administrative Expenses 140,000
Distribution Expenses 56,000
Plant and Machinery – Cost 150,000
Plant and Machinery – Accumulated Depreciation at 1 January 2005
Trade Receivables 36,000
Allowance for Receivables – 1 January 2005
Inventory – 1 January 2005 33,000
Share Capital
Trade Payables
Retained Earnings - 1 January 2005
8% Loan – Repayable 31 December 2009
Cash 5,000

Total Balances 600,000

1. Prepare Statement of Profit or Loss for year ended 31 December 2005

2. Prepare Statement of Financial Position for year ended 31 December 2005
ess at 30 April 20X3 which is presented below. Additional Information

1. The current year tax charg

CR
$ Dr
Cr
450,000
2. It has been determined tha
In addition, it was decided th

Dr
30,000 Cr

2500 Dr
Cr
10,000
32,000 3. Depreciation on plant and
25,500 Depreciation is charged to co
50,000
Dr
Cr

600,000 4. The loan was taken out on

Dr
Cr

5. Closing inventory has been

6. A customer bought goods

The customer returned these
No entries have been posted

Dr
Cr

7. Carbon is being sued by a c

Legal advisers think that it is
Legal expenses are charged t

Dr
Cr
 Additional Information

1. The current year tax charge has been estimated at $5,000.

Tax Expense 5000

Tax Payable 5000

2. It has been determined that trade receivables of $1,500 are irrecoverable.

In addition, it was decided that the allowance for receivables should be increased by $1,000.

Ir. Debts 1500

Receivables 1500

Ir. Debts 1000

Allowance 1000

3. Depreciation on plant and machinery is charged at 20% per annum on a reducing balance basis.
Depreciation is charged to cost of sales.

Deprecition Expense 24000 Cost of Sales

Acc. Depreciation 24000

4. The loan was taken out on 1 October 20X5. No interest has been accrued.

Interest Expense 1000 50000*8=4000

Interest Payable 1000 4000/12*3=1000

5. Closing inventory has been correctly valued at $27,000

6. A customer bought goods on credit from Carbon for $1,000 on 5 December 20X5.
The customer returned these goods on 28 December 20X5.
No entries have been posted for this return.

Sales Return 1000

Receivables 1000

7. Carbon is being sued by a customer regarding the sale of goods that the customer believes to be defective.
Legal advisers think that it is probable that Carbon will lose the case and that they will have to pay damages of $20,000 in 20X6.
Legal expenses are charged to administrative expenses.

Provision Expense 20000 Adminitrative expense

Provision Payable 20000
$20,000 in 20X6.
 SPL for Carbon, sole trader, for year ended 31.12.2005

Sales Revenue 449000

Cost of Sales 210000
Gross Profit 239000

Expenses

Administrative Ex. 162500

Distribution costs 56000

Operating Profit 20500

Finance Cost or Interest Expense 1000

Profit Before Tax 19500

Tax expense 5000

Profit for the year 14500

 Workings :

1. Cost of Sales

Opening Inventory 33000

Purchase 180000
Depreciation 24000
Closing Inventory -27000

Cost of Sales 210000

2. Administrative Expenses

Balance in the beginning 140000

Irrecoverable Debts 1500
Increase in allowance 1000
Provision 20000

Total Administrative Expenses 162500

 SOFP for Carbon, sole trader, for year ended 31.12.2005

$ '000 $ '000

Assets

NCA
Property, plant and equipment 96000
96000

Current Assets
Inventory 27000
Trade Receivables 30000
Cash 5000
62000

Total Assets 158000

Capital and Liabilities

Capital

Balance in Trial Balance - Capital 10000

Retained Earnings 40000

50000

Non-Current Liabilities
Loan 50000
50000

Current Liabilities
Trade Payables 33000
Tax Payable 5000
Provision 20000
58000

Totatl Equity and Liabilities 158000

 Workings :

1. Trade Receivables

Opening Balance 36000

Sales Return 1000 -
Irrecoverable Debt 1500 -
Allowance for receivables 2500 -
Increase in Allowance 1000 -
Net Trade Receivables 30000

2. Trade Payables

Balance in the beginning 32000

Interest Payable 1000 +

Total Trade Payables 33000

 Clerc has prepared a trial balance for his business at 31 December 20X9

Share Capital
Share Premium
Revaluation reserve at 1 January 20X9
Land & Bulidings - value/cost
Land & Bulidings - Accumulated Depreciation at 1 January 20X9
Plant and Machinery – Cost
Plant and Machinery – Accumulated Depreciation at 1 January 20X9
Trade and Other Receivables
Accruals
Inventory – 1 January 20X9
Sales
Trade and Other Payables
Retained Earnings - 1 January 20X9
5% Loan – Repayable 20Y3
Cash and cash equivalents
Purchase
Distribution Costs
Adminitrative expenses
Bank Interest Received

Total Balances

1. Prepare Statement of Profit or Loss for year ended 31 December 20X9

2. Prepare Statement of Financial Position for year ended 31 December 20X9

31 December 20X9
1 January 20X9
usiness at 31 December 20X9 which is presented below.

DR CR
$ $

100,000
20,000
50,000 110000 150000 210000
210,000 100000 60000 57592
30,000 267592
88,000
16,010
8,752
3,029
17,331
178,833
13,882
23,893
40,000
6,993
130,562
7,009
7,100
100

475,747 475,747
 Additional Information

1. Interest for the year on the bank loan has not yet been paid or accrued.

Dr Interest Expense 2000

Cr Interest Payable 2000

2. Land, which is non-depreciable, is included in the trial balance at a value of $110,000.

At 31 December 20X9 it was revalued to $150,000 and this revaluation is to be included in the financial statements.

Land Revaluation Surplus 40000

3. Depreciation is to be provided for the year to 31 December 20X9 as follows:

Buildings 10% per annum Straight line basis

Plant and machinery 20% per annum Reducing balance basis

As part of the buildings contains the office accommodation and part of the buildings contains the plant and machinery,
the depreciation for the ‘Buildings’ should be allocated between cost of sales and administrative expenses as follows:

%
Cost of sales 40 4000
Administrative expenses 60 6000

4. Included in trade receivables is a balance of $1,720 that is considered to be irrecoverable due to the customer
going into administration and the Directors of Clerc have decided to write off this receivable.

Dr Ir. Debt expense 1720

Cr Receivables 1720

5. Inventories at the close of business on 31 December 20X9 were valued at cost of $19,871.
Included in this amount was an inventory line at a cost of $4,000 that, due to change in legislation, is now illegal.
Clerc could rectify the items at a cost of $2,500 and plans to do so. The items usually retail to customers at $6,000.

6. The tax charge for the year has been calculated at $7,162.

Dr Tax Expense 7162

Cr Tax Payable 7162
e financial statements.

the plant and machinery,

tive expenses as follows:

ue to the customer

ation, is now illegal.

customers at $6,000.
 SPL for Clerc, sole trader, for year ended 31.12.20X9

Sales Revenue 178833

Cost of Sales 146920
Gross Profit 31913

Expenses

Administrative Ex. 14820

Distribution costs 7009

Operating Profit 10084

Finance Cost or Interest Expense 2000 -

Bank Interest Received 100 +

Profit Before Tax 8184

Tax expense 7162

Profit for the year 1022

 Workings :

1. Cost of Sales

Opening Inventory 17331 +

Purchase 130562 +
Depreciation ( Building ) 4000 +
Depreciation ( Plant ) 14398 +
Closing Inventory 19371 -

Cost of Sales 146920

2. Administrative Expenses

Balance in the beginning 7100

Irrecoverable Debts 1720
Depreciation ( Buildings ) 6000

Total Administrative Expenses 14820

 SOFP for Carbon, sole trader, for year ended 31.12.2005

$ '000 $ '000

Assets

NCA
Property, plant and equipment 267592
267592

Current Assets
Inventory 19371
Trade Receivables 7032
Cash 6993
33396

Total Assets 300988

Capital and Liabilities

Capital

Share Capital 100000

Share Premium 20000
Retained Earnings 24915
Revaluation Reserve 90000

234915

Non-Current Liabilities
Loan 40000
40000

Current Liabilities
Trade Payables 18911
Tax Payable 7162

26073

Totatl Equity and Liabilities 300988

 Workings :

1. Trade Receivables

Opening Balance 8752

Irrecoverable Debt 1720 -

Net Trade Receivables 7032

2. Trade Payables

Balance in the beginning 13882 +

Interest Payable 2000 +
Accruals 3029 +

Total Trade Payables 18911