(b) TWAASANTA a sole trader, has given you the following Trial Balance for adjusting before preparing...

 

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(b) TWAASANTA a sole trader, has given you the following Trial Balance for adjusting before preparing the Income Statement and Statement of Financial position for the year ended 30 April 2018: Debit Credit K'000 K'000 Sales 131,940 Purchases 33,000 Sales Returns 260 Purchases Returns 315 Opening Inventory 6,900 Trade Receivables 14,125 Trade Payables 16,070 Discounts Allowed 755 Discounts Received 559 Wages and Salaries 20,600 Electricity 1,000 General Expenses 2,340 Bank 13,710 Premises 70,000 Motor Vehicles 5,000 Equipment 3,500 Capital 25,000 Drawings 3,000 Suspense Totals 174.190 306 174.190 TWAASANTA has given you the following Information: 1. Discounts allowed of K55, 000 were doubled but posted correctly to the ledger accounts. 2. Purchases returns of K108, 000 had been posted to the debit of sales returns. 3. TWAASANTA's bank informed her that a cheque for K400, 000 from one of her customers was returned, marked: "insufficient funds". The customer has, however, assured TWAASANTA that the debt will be settled. 4. The bank balance includes a fixed deposit account of K8, 000, 000 on which interest of has been credited by the bank. There is no record of this transaction in TWAASANTA's 5. A customer who is also a supplier has agreed to an account set-off of the amount o K630,000. 6. Closing inventory was valued at K9, 069, 000. 7. It had been discovered that an electricity bill of K90, 000 that had been accrued at 30 April 2017 was not brought down as an opening balance on the electricity account. Required: (a) Prepare the suspense account showing the correction of the errors above that would clear the suspense account. (4 marks) (b) Prepare TWAASANTA's Income Statement for the year ended 30 April 2018, after correcting all the errors and adjustments in 1 to 7 above. (8 marks) (c) Prepare TWAASANTA's Statement of Financial Position as at 30 April 2018. (8 marks) (b) TWAASANTA a sole trader, has given you the following Trial Balance for adjusting before preparing the Income Statement and Statement of Financial position for the year ended 30 April 2018: Debit Credit K'000 K'000 Sales 131,940 Purchases 33,000 Sales Returns 260 Purchases Returns 315 Opening Inventory 6,900 Trade Receivables 14,125 Trade Payables 16,070 Discounts Allowed 755 Discounts Received 559 Wages and Salaries 20,600 Electricity 1,000 General Expenses 2,340 Bank 13,710 Premises 70,000 Motor Vehicles 5,000 Equipment 3,500 Capital 25,000 Drawings 3,000 Suspense Totals 174.190 306 174.190 TWAASANTA has given you the following Information: 1. Discounts allowed of K55, 000 were doubled but posted correctly to the ledger accounts. 2. Purchases returns of K108, 000 had been posted to the debit of sales returns. 3. TWAASANTA's bank informed her that a cheque for K400, 000 from one of her customers was returned, marked: "insufficient funds". The customer has, however, assured TWAASANTA that the debt will be settled. 4. The bank balance includes a fixed deposit account of K8, 000, 000 on which interest of has been credited by the bank. There is no record of this transaction in TWAASANTA's 5. A customer who is also a supplier has agreed to an account set-off of the amount o K630,000. 6. Closing inventory was valued at K9, 069, 000. 7. It had been discovered that an electricity bill of K90, 000 that had been accrued at 30 April 2017 was not brought down as an opening balance on the electricity account. Required: (a) Prepare the suspense account showing the correction of the errors above that would clear the suspense account. (4 marks) (b) Prepare TWAASANTA's Income Statement for the year ended 30 April 2018, after correcting all the errors and adjustments in 1 to 7 above. (8 marks) (c) Prepare TWAASANTA's Statement of Financial Position as at 30 April 2018. (8 marks)

Answer rating: 100% (QA)

a Suspense Account Date Description Debit K000 Credit K000 Opening balance 306 Discounts allowed dou... View the full answer