Jack Daw has prepared the following balance sheet as at 30 June 20X1:

Daw asks you to audit his accounts and in the course of your examination you find the following:

(a) A dividend of £100 has been paid direct to the bank and no entry has been made in the books.

(b) A debt of £100 is irrecoverable and you agree with Daw that the provision for doubtful debts should be fixed at 10 per cent of the remaining debtors.

(c) A purchase of plant, costing £500, has been charged to repairs. It was agreed that this should be depreciated by 10 per cent on cost.

(d) The stock on 30 June 20X1 was overvalued by £250.

(e) On counting the petty cash you find there is only £10 in the box. It seems likely that the balance has been stolen by an employee.

Required:

(a) A statement showing the necessary adjustments to the profit for the year to 30 June 20X1.

(b) The amended balance sheet as at 30 June 20X1.

Transcribed Image Text:

Capital account Plant at cost 8,000 Balance, 1 July 20X0 10,000 Less: Depreciation 2,000 6,000 Profit for the year 2,050 Vehicles at cost 3,000 12,050 Less: Depreciation 1,000 2,000 Creditors and provisions 5,000 Stock 7,000 Bank overdraft 1,000 Debtors 3,200 Less: Provision for doubtful debts 200 3,000 Cash - 50 18,050 18,050