Question 1

Horswill runs a shoe store and has produced the following trial balance for the year ended 31^st March 2020.

You are required to:

1. Prepare journal entries to deal with all necessary adjustments. (20 Marks)
2. Prepare a statement of profit or loss and a statement of financial position as at 31^st March 2020. (20 Marks)

TOTAL = 40 Marks

Horswill Trial Balance as at 31 March 2020

	000	000
Accumulated depreciation of land and buildings at 1.4.19		300
Accumulated depreciation of shop fittings at 1.4.19		80
Allowance for receivables		10
Bank loan at 6%		500
Capital		430
Carriage inwards	46
Carriage outwards	36
Cash at bank	25
Discounts allowed	34
Discounts received		11
Drawings	66
Heat and light	55
Insurance	77
Inventory as at 1.4.19	280
Land and buildings	600
Payables		160
Purchases	1292
Receivables	400
Returns inwards	60
Returns outwards		30
Sales		2000
Shop fittings	240
Wages	310
TOTALS	3521	3521

Additional information:

1. The land and buildings are shown at cost including 300,000 for the land. Buildings are depreciated on a straight line basis over 50 years
2. Shop fittings are depreciated at 25% on a reducing balance basis
3. Horswill took goods valued at 10,000 from the shop for his own use during the year
4. Insurance includes 36,000 for the year to 30 September 2020
5. An accrual for heat and light for February and March 2020 is needed
6. Inventory at 31 March 2020 is valued at a cost of 140,000
7. A debt of 8000 is irrecoverable and a further debt of 12000 is 60 days overdue.
8. Horswill sold some shop fittings at the end of the year for 20,000 in cash. He has not recorded the transaction. The fittings cost 100,000 5 years ago.