Handie has been trading as a sole trader for several years having last prepared financial statements

on 31 December 2021. The general ledger accounts balances brought down on 1 January 2022 were as follows: K000 Capital 800

Cash In hand 50

cash at bank 100

Trade receivables control 300

Trade Payables control 200

Delivery van 350

Office Equipment 180

Loan from Bruce 100

Inventory 120

The sales ledger accounts consisted the following:

K000 Sam 40

Silvia 60

Japhet 70

Cathy 75

Jose 45

lute 10

____ Total per trade receivables control account in general ledger 300

____

The purchases ledger accounts consisted the following:

K000 Becky 32

lister 60

Paul 18

Lenox 30

Eunice 35

Dave 25

____ Total per trade payables control account in general ledger 200

____

The following transactions took place during the month of January 2022:

1/1 Made credit sales to Cathy, Lute and Silvia amounting to K42,000, K18,000 and K13,000 respectively. Made cash sales totalling K10,200.

Made purchases of trading inventory on credit from Lenox, Eunice and Becky amounting to K15,000, K22,000 and K28,000 respectively. Made cash purchases of trading inventory amounting to K14,000. Received cheques towards settlement of amounts owed by Sam, Jose and Lute amounting to K13,500, K6,750 and K20, 250 respectively. All these amounts are after allowing them cash discounts at 10%. The cheques were deposited immediately.

2/1 Deposited cash into the bank account amounting to K20,000.

3/1 Accepted returns of inventory previously sold to Lute and Silvia amounting to K5,000 and K8,200 respectively.

Paid rent for January 2022 by cheque amounting to K8,000.

4/1 Handie brought into the business a car valued at K70,000 which he previously used as a personal car. The car now belongs to the business.

5/1 Handie returned trading inventory previously bought from Lister and Eunice amounting to K10,000 and K2,000 respectively.

8/1 Handie took out of cash K2,000 for personal use.

10/1 Paid cheques towards settlement of amounts owing to Dave, Paul and Lister amounting to K9,500, K4,750 and K14, 250 respectively. All these amounts are after receiving a cash discount from them 0f 5%.

15/1 Bought a computer printer (office equipment) at a cost of K10,00 paying by cheque.

18/1 Got a loan from Lyndal amounting to K40,000. A direct transfer to Handies business bank account was made for the loan.

20/1 Made credit sales to Sam, Japhet and Jose amounting to K25,000, K30,000 and K26,000 respectively. Made cash sales totalling K30,800.

Made purchases of trading inventory on credit from Lister, Paul and Dave amounting to K25,000, K12,000 and K22,000 respectively. Made cash purchases of trading inventory amounting to K12,000.

Received cheques towards settlement of amounts owed by Cath, Japhet and Silvia amounting to K20,250, K6,750 and K26,000 respectively. All these amounts are after allowing them cash discounts at 10%. The cheques were deposited immediately.

22/1 Deposited cash into the bank account amounting to K10,000.

28/1 Accepted returns of inventory previously sold to Japhet and Jose amounting to K6,000 and K4,300 respectively.

28/1 Handie returned trading inventory previously bought from Becky and Lenox amounting to K3,,000 and K2,500 respectively.

31/1 Handie took out of cash K3,000 for personal use. 31/1

31/1 Paid cheques towards settlement of amounts owing to Becky, Eunice and Lenox amounting to K11,400, K9,500 and K20,900 respectively. All these amounts are after receiving a cash discount from them 0f 5%. Paid wages, electricity and rates amounting to K6,000, K1,200 and K2,000 respectively.

Required:

(a) Summarise all the transactions for January 2022 in the appropriate books of prime entry. (15 marks)

(b) Update the sales ledger, Purchases Ledger and the General Ledger accounts with the transactions for January 2022 as summarised in their respective books of prime entry. (15 marks)

(c) Extract a trial balance at 31 January 2022. (5 marks)

(d) Prepare a Statement of Profit or Loss for Handie for the month to 31 January 2022 and a statement of Financial Position as at 31 January 2022. Inventory at 31 January 2022 was K130,000. Ignore accruals and prepayments and depreciation