REVISION – EXTENDED TUTORING PROGRAME

FINAL ACCOUNTS WITH ADJUSTMENTS

NAME: ______________________________________ DATE: 12TH OCT 2023

ANSWER THE FOLLOWING:

1. Leroy is a trader with a financial year end of 31 October. The following balances were extracted from his
books of account on 31 October 2018. $

Sales 195 600

Sales returns 600
Purchases 87 150
Carriage inwards 450
Rent 12 000
Wages and salaries 25 600
Drawings 4 500
Operating expenses 52 600
Interest 250
Loose tools 400
Motor vehicles 17 000
Fixtures and fittings 8 000
Provision for depreciation of motor vehicles 3 400
Provision for depreciation of fixtures and fittings 2 400 Provision
for doubtful debts 260 Inventory
at 1 November 2017 22 100 Trade
receivables 14 120 Trade
payables 14 600
Bank 780 debit
Capital at 1 November 2017 19 290
5% bank loan repayable in 2026 10 000

Additional information at 31 October 2018:

• The value of trade receivables included a debt of $120 which was considered unlikely to be paid.
• The provision for doubtful debts was to be maintained at a rate of 2 per cent.
• Loose tools were valued at $320.

• Depreciation for the year on motor vehicles and fixtures and fittings was yet to be provided. Leroy
depreciates his motor vehicles at the rate of 20 per cent per annum using the reducing balance method and
depreciates his fixtures and fittings at the rate of 10 per cent per annum using the straight-line method.

• During the year goods costing $2 000 had been taken from the business by Leroy for his own use.
• Inventory at the yearend was valued at $19 800.
• Accrued operating expenses at the yearend amounted to $1 650. There was also some unpaid interest on
the bank loan.

Required:
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Prepare the income statement for the year ended 31 October 2018 and the statement of financial position
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at 31 October 2018.
 2.Thein has a retail business. The following balances were extracted from his books at the end of his
financial year on 31 March 2022. $

Leasehold property – 25 years (cost) 50 000

Equipment (cost) 54 000

Provisions for depreciation:

Leasehold property 10 000
Equipment 17 000

6% bank loan repayable 31 December 2025 25 000

Bank 5 150 (dr.)
Trade receivables 6 750
Trade payables 4 010
Provision for doubtful debts 700
Revenue 78 580
Purchases 18 240
Purchases returns 1 600
Inventory at 1 April 2021 4 690
Equipment repairs 850
Equipment running expenses 2 650
General expenses 8 400
Wages 15 300
Insurance 3 640
Power and water 2 300
Advertising 5 100
Discount allowed 1 650
Discount received 330
Capital at 1 April 2021 50 000
Drawings 8 500

Additional information at 31 March 2022:

• Inventory was valued at $3 870.

• Thein took inventory valued at $450 for his own use.
• Equipment running expenses, $750, were accrued, and insurance, $1 350, was prepaid.
• The 6 per cent bank loan was received on 1 December 2021.
• An appropriate amount is to be written off the lease.
• The purchase of additional equipment, $10 000, had been omitted from the books.
• Payment was $5 000 by cheque with the remainder on credit.
• Equipment is to be depreciated at the rate of 20 per cent per annum using the diminishing(reducing)
balance method.
• Provision for doubtful debts is to be maintained at 8 per cent of trade receivables.

Required:

A Prepare the income statement for the year ended 31 March 2022.
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B Prepare the statement of financial position at 31 March 2022.

 3.Nzita is a sole trader. His statement of financial position at 31 January 2022 included the following
balances: $

Trade receivables 700

Trade payables 400
Inventory 1 100
Equipment at cost 15 700
Provision for depreciation of equipment 4 100
Prepaid rent 250
Bank 2 100 debit

a Calculate Nzita’s capital at 31 January 2022.

A summary of Nzita’s bank statements showed the following for the year ended 31 January 2023.

Receipts from customers 28 900

Payments to suppliers 12 600
Wages 5 200
Rent 3 100
Purchase of new equipment 1 100
Sundry expenses 2 650
Drawings 6 600

Further information is as follows:

• Nzita depreciates his non-current assets at the rate of 10 per cent per annum on the straight-line basis. A
full year’s depreciation is provided in the year of purchase.
• No non-current assets were disposed of during the year.
• All sales and purchases were made on credit.

Proper books of account were not kept during the year, but Nzita provided the following information at
31 January 2023. $

Trade receivables 900

Trade payables 650
Inventory 1 400
Prepaid rent 150

b Prepare the following accounts for the year ended 31 January 2023 to determine the sales and
purchases for the year:
• Total trade receivables account and • Total trade payables account

c Prepare Nzita’s income statement for the year ended 31 January 2023.

d Prepare an extract from Nzita’s statement of financial position at 31 January 2023 showing the capital
section.

e Calculate, to two decimal places, Nzita’s gross margin for the year.
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f Suggest two reasons why Nzita’s gross margin was lower than in the previous year.
 4.Kisha owns Venus Beauty Studios. Her business’s financial year ended on 31 May 2014 when the
following trial balance was extracted from her business’s books of account.

Trial balance at 31 May 2022

$ $

Capital 45 580
Cash at bank 8 580
Drawings 31 850
Electricity 8 810
Equipment Cost 56 000
Provision for depreciation at 1 June 2021 14 000
Furniture and fittings Cost 28 000
Provision for depreciation at 1 June 2021 5 600
General expenses 9 440
Materials (cosmetics, etc.) (expense) 25 320
Profit from sale of old equipment 270
Rent 18 150
Revenue (receipts from customers) 192 990
Trade payables 1 820
Wages of assistants 66 370
Water charges 7 740

260 260 260 260

Additional information at 31 May 2022:

• Rent, $630, was due but unpaid; general expenses, $490, were prepaid.

• Depreciation should be provided as follows:

 equipment 25 per cent per annum using the straight-line method.

 furniture and fittings 20 per cent per annum using the reducing balance method.

Prepare an income statement for the year ended 31 May 2022 and a statement of financial position at that
date.
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