Question
The following balances were taken from Jane's books who is a sole trader and operates a catering business. Jane's trial balance for the year to
The following balances were taken from Jane's books who is a sole trader and operates a catering business.
Jane's trial balance for the year to 30th June 2019 was as follows:
Trial Balance | Dr () | Cr () |
Equipment at cost | 42,000 | |
Accumulated depreciation of equipment as at 1st July 2018 | 35,000 | |
Inventory as at 1st July 2018 | 50,800 | |
Debtors | 32,000 | |
Bank / cash | 112,678 | |
Creditors | 23,027 | |
Provision for doubtful debts as at 1st July 2018 | 1,280 | |
Long term loan (at 10% per annum) | 50,000 | |
Owners capital | 30,640 | |
Retained profits as at 1st July 2018 | 62,901 | |
Sales | 353,800 | |
Purchases | 185,000 | |
Motor expenses | 34,890 | |
Loan interest (all relating to long term loan) | 2,500 | |
Insurance | 56,790 | |
Rent | 24,500 | |
Office expenses | 14,890 | |
Bad debts written off | 600 | |
Totals | 556,648 | 556,648 |
Additional information
- The stock/inventory as at 30th June 2019 originally cost 36,000. However, the estimated net realisable value is calculated at 35,200.
- A motor vehicle repair carried out in September 2018 costing 400 was still unpaid at the end of the year.
- Insurance prepaid as at 30th June 2019 was 1500.
- Rent owing as at 30th June 2019 were 2050.
- Increase the provision for doubtful debts to 6% of debtors.
- Depreciation on equipment is to be taken at 25% on a reducing balance basis.
Required
- Prepare Jane's income statement for the year ending 30th June 2019 and a statement of financial position as at 30th June 2019.
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