2

You are required to prepare:

a) Income Statement for the year ended 31st December 2019

b) Statement of financial position as at 31st December 2019

QUESTION 2

A) Nananom enterprise purchased 3 Motor Vehicles for their business operations at a cost of GHS

50,000 each on January 1, 2016. On July 1, 2017, they added a new BMW X5 which cost GHS 100,000

to the fleet. On June 30, 2018, one of the vehicles purchased in 2016 was disposed for GHS 19,200.

On October 1, the same year, another vehicle was acquired for GHS 120,000 on credit from Silver Star

Auto Limited to replace the disposed vehicle.

Depreciation is charged at 20% on cost and on one-month ownership basis. The financial year ends

on December 31.

You are required prepare:

a) Motor Vehicles Account (2016-2019)

b) Provision for depreciation Account (2016-2019)

c) Disposal account (2018)

d) Extract of Statement of profit or loss account (2018 and 2019)

e) Extract of Statement of financial position. (2018 and 2019)

B) The trial balance of Paa Kwasi Enterprise has an excess of credit over debit of GHS 50,000.

Suspense account has been opened to balance the accounts.

The following transactions were later discovered:

i) Discount allowed of GHS 20,000 and Discount received of GHS 32,000 have both been

entered on the wrong side of the trial balance.

ii) The receivable control account balance of GHS 897,548 had been included in the trial

balance as GHS 969,548

iii) Sales of GHS 8,000 had been omitted from the sales records (i.e from the sales account).

iv) Purchase of raw material of GHS 16,020 was entered in the purchase account as GHS 18,000.

v) The debit balance of GHS 11,980 on the current account with the Proprietor's wife had been

omitted from the trial balance.

Required:

a) Make journal entries to correct the errors

b) Prepare the suspense account.