Bernard owns a retail outlet. His qualified bookkeeper who maintained his accounting records has resigned by the year-end. Bernard was so confident that he had sufficient knowledge of double-entry accounting that he extracted the year-end Trial Balance, as shown.

He is surprised that his Trial Balance fails to balance. He seeks your help to:

(a) Identify the reasons why the Trial Balance is not balancing; and

(b) Prepare the correct Trial Balance as at 31 December 2010.

(c) Assuming that all goods purchased have been sold and that no expenses remain unpaid and ignoring depreciation, prepare the financial statements of Bernard’s Retail.

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Trial Balance as at 31 December 2010 Debit Credit Motor vehicles a/c Stationery a/c Capital a/c Cash a/c Purchases a/c Sales a/c Joe's Loan a/c Rent a/c Salaries a/c Advertising a/c Vehicle maintenance a/c Interest on loan a/c £ 7,200 4,215 I 400 - 210 12,025 4 145 4,000 538 6,948 3,500 800 528 412 - 16,871