ACCOUNTING SOLUTION

Question $1$

The following balances were extracted from the books of Yoji Itadori as at December $31,2021.$ He is a sole trader who operates a clothing wholesale business. At the beginning of the year Erza Scarlett rented a very small section of the store for $$7,000$ per month.

$\backslash$table$[[$PARTICULARS$,$DR$,$CR$],[$Capital$,12,000,104,000],[$Drawings$,160,000,],[$Land$,70,000,],[$Buildings$,,33,600],[$Provision for Depreciation: Building,$40,000,],[$Motor Vehicles,,$10,840],[$Provision for Depreciation: Motor Vehicles,,$18,000],[$Accounts payable,$13,300,],[$Accounts receivable,$9,700,],[$Stock$,$ January $1,2021,,21,300],[$Bank$,4,160,],[$Cash$,58,200,],[$Purchases$,,180,000],[$Sales$,10,180,8,730],[$Returns$,,90,000],[$Long$-$term Loans,,$65,000],[$Rental income from Erza Scarlett,$3,400,2,200],[$Discounts$,,1,190],[$Provision for Bad Debts,$17,900,],[$Utilities$,49,600,],[$Insurance$,2,200,],[$Carriage Inwards,$1,800,],[$Carriage Outwards,$88,520,],[$Wages$,6,400,],[$Sundry Expenses,$2,500,],[$Bad Debts,,$],[$Interest Income,$549,860,549,860],[,,],[,,]]$

Year end notes:

a$)$ Depreciate Buildings at $8\%$ per annum on the straight line basis, the motor vehicles at $10\%$ per annum on the reducing balance basis.

b$)$ Thirty thousand dollars $($$$30,000)$ of the long$-$term loans must be repaid by March $31,2022.$

c$)$ Wages in arrears on December $31,2021,$ were $$11,480,$ interest income was prepaid in the amount of $$3,000.$

d$)$ Stock on December $31,2021,$$$8,400,$ however it appears that an additional amount, $$1,700$ was found in a storeroom. The amount was deemed material and should be accounted for.

e$)$ The insurance paid in the trial balance represents the amount for the period January $1,2021,$ to March $31,2022.$

f$)$ On September $1,2021,$ the owner took merchandise amounting to $$500$ from the clothing store and continued to do so at the beginning of every month up to June $2022.$

g$)$ The Provision for bad debts is maintained to reflect $5\%$ of accounts receivable at the financial year end of the business.

Required:

a$)$ Prepare the Statement of Profit or Loss and

$(30$ marks$)$

b$)$ Prepare a Statement of Financial Position for for Yogi Itadori

$(20$ marks$)$

Use appropriate headings.

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