Adam Mullings is a retailer who had not kept a full set of accounting records. The...
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Adam Mullings 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, 2020, Receipts Details Trade Receivables Cash sales Loan 2 3 4 6 S 1,38,500 Trade payables 950,080 Rent 300,000 Electricity You are given the following additional information: 1 7 2.634.580 Details Loan principal Water Salary Payments Accounting fee (2019) Telephone Computer equipment Drawings Cash purchases S 745,540 312,000 40,720 100,000 13,780 613,600 32,000 23,080 300,000 4,000 301,440 2.486.160 Favourable bank balance per cash book on January 1, 2020 amounting to $106,920 During the financial year discounts allowed by trade payables amounted to $440 and those allowed to trade receivables $800. During the financial year goods returned by trade receivables amounted to $1,600 and goods returned to trade payables amounted to $6,900. During the financial year a trade debt of $1,200 owed by Lottie Graham was off-set against the $2,000 owing to the same Lottie Graham a trade creditor. Janet Hutton, a cash sales customer returned goods during the financial year amounting to $700, Janet Hutton was repaid her $700 from the daily cash sales. Adam Mullings grants a credit period of 30 days to trade receivables. The closing trade receivables balance includes a debt of $800 from Fanon Browning. The goods were sold to Fanon in November 2019. Fanon went to the United States of America for a two (2) weeks' vacation in February 2020, On December 31, 2020 Fanon was still in the USA. The amount of cash received from cash sales were all paid into the bank with the exception of: $2,800 Plumbing repairs $4,000 Donation to community Christmas party 8 9 10 Adam Mullings keeps a cash float of $10,000 for change in his retail outlet. Adam Mullings agreed to pay his daughter Virginia, 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) The computer equipment was purchased on April 9, 2020. 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. 11 The accounting fee for preparing the 2020 financial statements is estimated at $35,200. 12 During the year, Adam Mullings puts a further $135,000 into the bank account of the business to shore up working capital. 13 On April 1, 2020 Adam Mullings received a loan of $300,000 from his mother Mara Mullings. Interest should be charged on the reducing balance at a rate of 10% per annum. The first interest payment is to be made on March 31, 2021. The principal is being paid in equal instalments of $100,000 on September 30, 2021, September 30, 2022 and September 30, 2023. 14 Inventory Furniture (at cost) Allowance for depreciation - furniture Trade receivables Trade payables Rent paid in advance Electricity owing December 31, 2019 138,400 100,000 30,000 6,900 1,420 3,500 December 31, 2020 77,300 100,000 40,000 2,360 5,200 24,000 3,660 Required: a) Prepare the Trade Debtors Control Account b) Prepare the Trade Creditors Control Account c) Prepare the Statement of Affairs as at December 31, 2019 d) Prepare the Income Statement for the year ended December 31, 2020 (10 marks) (8 marks) (15 marks) (25 marks) e) Prepare the Statement of changes in owner's equity for the year ended 31 December, 2020. (7 marks) f) Prepare a COMPARATIVE Statement of Financial Position as at 31 December, 2020. (25 marks) g) Prepare a Statement of Cash Flow for the year ended 31 December, 2020 (25 marks) Adam Mullings 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, 2020, Receipts Details Trade Receivables Cash sales Loan 2 3 4 6 S 1,38,500 Trade payables 950,080 Rent 300,000 Electricity You are given the following additional information: 1 7 2.634.580 Details Loan principal Water Salary Payments Accounting fee (2019) Telephone Computer equipment Drawings Cash purchases S 745,540 312,000 40,720 100,000 13,780 613,600 32,000 23,080 300,000 4,000 301,440 2.486.160 Favourable bank balance per cash book on January 1, 2020 amounting to $106,920 During the financial year discounts allowed by trade payables amounted to $440 and those allowed to trade receivables $800. During the financial year goods returned by trade receivables amounted to $1,600 and goods returned to trade payables amounted to $6,900. During the financial year a trade debt of $1,200 owed by Lottie Graham was off-set against the $2,000 owing to the same Lottie Graham a trade creditor. Janet Hutton, a cash sales customer returned goods during the financial year amounting to $700, Janet Hutton was repaid her $700 from the daily cash sales. Adam Mullings grants a credit period of 30 days to trade receivables. The closing trade receivables balance includes a debt of $800 from Fanon Browning. The goods were sold to Fanon in November 2019. Fanon went to the United States of America for a two (2) weeks' vacation in February 2020, On December 31, 2020 Fanon was still in the USA. The amount of cash received from cash sales were all paid into the bank with the exception of: $2,800 Plumbing repairs $4,000 Donation to community Christmas party 8 9 10 Adam Mullings keeps a cash float of $10,000 for change in his retail outlet. Adam Mullings agreed to pay his daughter Virginia, 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) The computer equipment was purchased on April 9, 2020. 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. 11 The accounting fee for preparing the 2020 financial statements is estimated at $35,200. 12 During the year, Adam Mullings puts a further $135,000 into the bank account of the business to shore up working capital. 13 On April 1, 2020 Adam Mullings received a loan of $300,000 from his mother Mara Mullings. Interest should be charged on the reducing balance at a rate of 10% per annum. The first interest payment is to be made on March 31, 2021. The principal is being paid in equal instalments of $100,000 on September 30, 2021, September 30, 2022 and September 30, 2023. 14 Inventory Furniture (at cost) Allowance for depreciation - furniture Trade receivables Trade payables Rent paid in advance Electricity owing December 31, 2019 138,400 100,000 30,000 6,900 1,420 3,500 December 31, 2020 77,300 100,000 40,000 2,360 5,200 24,000 3,660 Required: a) Prepare the Trade Debtors Control Account b) Prepare the Trade Creditors Control Account c) Prepare the Statement of Affairs as at December 31, 2019 d) Prepare the Income Statement for the year ended December 31, 2020 (10 marks) (8 marks) (15 marks) (25 marks) e) Prepare the Statement of changes in owner's equity for the year ended 31 December, 2020. (7 marks) f) Prepare a COMPARATIVE Statement of Financial Position as at 31 December, 2020. (25 marks) g) Prepare a Statement of Cash Flow for the year ended 31 December, 2020 (25 marks)
Expert Answer:
Answer rating: 100% (QA)
a Trade Debtors Control Account Date Particulars Details Debit Credit Balance 01012020 Balance bd 106920 Cash Sales 138500 138500 245420 Discounts Allowed 800 244620 Goods Returned 1600 1600 243020 Se... View the full answer
Related Book For
Understanding Financial Accounting
ISBN: 9781119406921
2nd Canadian Edition
Authors: Christopher D. Burnley
Posted Date:
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