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SECTION A ANSWER QUESTION ONE Question 1 (50 marks) Edna Brady is a retailer, who had not kept a full set of accounting records. The

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SECTION A ANSWER QUESTION ONE 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 Payments Debtors 692,250 Trade creditors 372,770 Cash sales 475,040 Rent 156,000 Loan from Mary 150,000 Electricity 20,360 Loan principal 50,000 Water 6,890 Salary 306,800 Accounting foe (2016) 16,000 Telephone 11.540 Computer equipment 150,000 Drawings 2,000 Cush purchases 1,317,290 1,243,080 150.720 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: $1,400 Plumbing repairs $2,000 Donation to community Christmas party 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 ut 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 S 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. December 31, 2016 December 31, 2017 Stock 69,200 38,650 Furniture (at cost) 50,000 50,000 Allowance for depreciation - furniture 15,000 20,000 Trade debtors 3,450 1,180 Trade creditors 2,600 Rent paid in advance 12,000 Accrued electricity 1,750 1,830 Required: (a) Prepare the Trade Debtors Control Account. (4 marks) (b) Prepare the Trade Creditors Control Account. (3 marks) (c) Prepare the Income Statement for the year ended December 31, 2017. (23 marks) (d) Prepare the Balance Sheet as at December 31, 2017.(20 marks) Page 3 12 710

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