Question 1

Charles Clarke is a sole trader who operates a wholesale in Georgetown. He rents a small section of the building to Jermain Brown, for $4,500 per month starting June 1, 2015 until the end of the accounting year. The following trial balance was as at March 31, 2016.

Particulars	DR ($)	CR($)
Furniture	150,000
Motor Vehicle	600,000
Purchases	1,000,500
Wages	140,500
Bad debts	3,000
Provision for depreciation - Furniture		5,000
Provision for depreciation - Motor Vehicle		120,000
Capital		150,000
Loan		300,000
Bank	47,300
Rent received from Jermain Brown		30,000
Discounts	3,500	4,500
Returns	42,200	22,000
Carriage inwards	2,500
Rent paid	80,000
Provision for bad debts		1,500
Accounts payable		94,000
Drawings	8,000
Stock at April 1, 2015	235,000
Cash	25,500
Accounts receivable	35,000
Sales		1,670,000
Insurance	6,000
Carriage outwards	18,000
	2,397,0QO	2,397,QOO

1. Insurance owing was $500, wages were prepaid $800
2. The provision for bad debt is to be adjusted to 7% of accounts receivable.
3. Stock at the yearend was valued at $65,700. How ever it appears that an additional amount of $2,200 was omitted from the accounts. This amount was deemed to be material and should be accounted for in the financial statements.
4. Furniture is to be depreciated at 10% per annum using the reducing balance method and motor vehicle is to be depreciated at 10% based on the straight-line method.

Required:

1. Prepare Charles Clarke's Statement of Profit or Loss for the year ended March 31, 2016

(25 marks)

1. Prepare Charles Clarke's Statement of Financial Position as at March 31, 2016

(15 marks)