Question 1 (50 marks) Edna Brady is a retailer, who had not kept a full set of accounting records. The following is a summary of her bank transactions in her cash book for the year ended December 31, 2017. $ Receipts Debtors Cash sales Loan from Mary 692,250 475,040 150,000 SECTION A ANSWER QUESTION ONE 1,317,290 Payments Trade creditors Rent Electricity Loan principal Water Salary Accounting fee (2016) Telephone Computer equipment Drawings Cash purchases $ 372,770 156,000 20,360 50,000 6,890 306,800 16,000 11,540 150,000 2,000 150.720 1,243,080 You are given the following information: 1. Favourable bank balance per cash book on January 1, 2017 amounted to $53,460. 2. During the financial year discounts allowed by trade creditors amounted to $220 and those allowed to trade debtors $400. 3. During the financial year goods returned by trade debtors amounted to $800 and goods returned to trade creditors amounted to $3,450. 4. During the financial year a trade debt of $600 owed by Sandra Bookal was set off against the $1,000 owing to the same Sandra Bookal a trade creditor. 5. Edna Brady grants a credit period of 30 days to trade debtors. The closing trade debtors balance includes a debt of $400 from John Sneaky. The goods were sold to John in November 2016. John went to the United States of America (USA) for a two (2) weeks vacation in February 2017. On December 31, 2017 John was still in the USA. Question 1 continued 6. The amount of cash received from cash sales were all paid into the bank with the exception of: Judine Williams, a cash sales customer returned goods during the financial year amounting to $350. Judine Williams was repaid her $350 from the daily cash sales. 7. Edna Brady keeps a cash float of $5,000 for change at her retail outlet. 8. Edna Brady agreed to pay her son Neville, a commission of 5% of the net profit after charging such commission, for working in the retail outlet on Sundays. (Round to the nearest dollar). 9. The computer equipment was purchased on April 9, 2017. Depreciation should be calculated on the computer equipment on the straight line basis at a rate of 20% per annum on cost. It is the policy of the business to charge a full month's depreciation in the month of acquisition or disposal. 10. The accounting fee for preparing the 2017 financial statements is estimated at $17,600. 11. On April 1, 2017 Edna Brady received a loan of $150,000 from her mother. Interest should be charged on the reducing balance at a rate of 20% per annum. The first interest payment is to be made on March 31, 2018. The principal is being paid in equal instalments of $50,000 on September 30, 2017, September 30, 2018 and September 30, 2019. 12. $1,400 Plumbing repairs $2,000 Donation to community Christmas party (c) Required: (a) Stock Furniture (at cost) Allowance for depreciation - furniture Trade debtors Trade creditors Rent paid in advance Accrued electricity (d) December 31, 2016 S 69,200 50,000 15,000 3,450 710 1,750 December 31, 2017 38,650 50,000 20,000 1,180 2,600 12,000 1,830 Prepare the Trade Debtors Control Account. (4 marks) Prepare the Trade Creditors Control Account. (3 marks) Prepare the Income Statement for the year ended December 31, 2017. (23 marks) Prepare the Balance Sheet as at December 31, 2017. (20 marks) Page 3