QUESTION

Maximus, a sole trader extracted the following balances from his ledgers at the close of business on 31^st December, 2018.

Particulars

GH

GH

Furniture

42,000

Sales and Purchases

503,200

784,200

Wages and Salaries

162,800

Office Fixtures

24,000

Capital

885,200

Irrecoverable Debts

6,400

Rates and Insurance

21,800

Electricity

20,000

Discounts

8,400

5,800

Sales and Purchases Returns

5,400

6,300

Carriage Inwards

5,400

Postage and Stationery

5,100

Inventory as at 31^st Dec, 2017

63,200

Receivables and Payables

72,400

35,000

Allowances for Trade Receivables

3,000

Carriage Outwards

9,000

Dividend Received

8,000

Drawings

36,000

Accumulated Depreciation- Building

20,000

Accumulated Depreciation- Furniture

7,000

Accumulated Depreciation- Office Fixtures

3,000

Rent Received

9,000

Miscellaneous Expenses

14,400

Cash and Cash Equivalent

49,000

Building

800,000

Loan

100,000

1,857,500

1,857,500

The following additional information is available

Inventory as at 31^st December 2018 was valued at cost GH84,000.

Accrued wages and salaries as at 31^st December 2018 was GH 3,000, Dividend to be received were in arrears to the tune of GH 2000 as at that same date.

Irrecoverable debts of GH2,000 should be written off as at 31^st December 2018

Rates prepaid as at 31^st December 2018 amounted to GH 2,400.

Maximus wishes to increase his allowances for trade receivables to 5% of the remaining receivables.

Provide for depreciation as follows: Furniture, 10% on cost, Office Fixtures 5% on net book value. Building 5% on cost.

Interest on loan is unpaid as at 31^st December, 2018.

Rent of GH 3,500 was received in advance as at 31^st December, 2018

The owner withdrew inventory worth GH4, 000 for his personal use.

Requirements: Prepare the Income Statement for the year ended 31^st December, 2018 and Statement of Financial Position as at that date.