Questio1

(a) Biemso is a popular joint in Kumasi that sells food and drinks. The trial balance of the business as at 31^st December, 2010 is given below.

Trial balance as at 31^st December 2010

Debit GHS Credit GHS

Capital 1,205,700

Drawings 150,000

Sales 3,040,000

Purchases 1,270,000

Return Inwards 34,000

Return outwards 63,000

Discount Allowed 15,500

Discount Received 12,900

Carriage inwards 72,000

Carriage outwards 88,000

Stock at 01/01/2008 124,200

Plant & Machinery (cost GHC750,000) 490,000

Office Equipment 108,000

Furniture & Fittings (cost GHC520,000) 464,000

Provision for Doubtful debt 6,050

Bad debt written off 12,000

Wages & Salaries 365,000

Cash in hand 82,000

Bank balance 20,800

Debtors 120,550

Creditors 116,100

Computers 1,000,000

Selling expenses 69,300

4,464,550 4,464,550

The following addition information were given

1. Stock at the end of the year was 50% more than the opening balance.

2. Depreciation is provided on cost as follows: Plant & machinery 10%, Furniture & fittings 15%, Computers 10%.

3. Salaries & Wages prepaid as at 31^st December, 2010 was GHS26,000.

4. Stock worth GHS33,000 was withdrawn by the proprietor for personal use.

5. Provision for doubtful debts is to be reduced by 1,900.

You are required to prepare the trading and Income Statement for the year ended 31^st December 2010 and a Statement of Financial Position as at that date.

(b) Differentiate between Journal and Ledger