$5$:$50$ PM Fri $27$ Jun

$96\%$

vle.mona.uwi.edu

Question $3$:

Dane Farqi is a retailer in Jamaica who had not kept a full set of books. The following is a summary of his bank statement for the year ended June $30,2014.$

Bank Statement Summary

$\backslash$table$[[,$Debit $$,$Credit $$],[$Balance brought forward July $1,2013,6,820,],[$Payments to creditors,$416,800,],[$Overdraft interest,$2,510,],[$Credit card $($net$),,122,010],[$Drawings$,10,000,],[$Rent$,195,000,],[$Rental income,,$2,000],[$Cash sales,,$1,465,190],[$Insurance$,55,000,],[$Debtors$,,329,860],[$Salaries$,350,000,],[$Cash purchases,$540,100,],[$Electricity$,48,136,],[$Water$,7,625,],[$Telephone$,8,250,],[$Employers$\text{'}$ statutory contributions,$24,000,],[$Office supplies,$31,680,],[$Loan interest,$4,000,],[$Loan principal,$20,000,],[$Additional capital,,$50,000],[$Balance carried forward June $30,2014,249,139,-],[,1,969,060,1,969,060]]$

The amount of cash received from cash sales were all paid into the bank with the exception of:

$ $8,000$ paid for personal expenses

$$10,000$ paid for legal fees

Dane Farqi keeps a cash float of $$2000$ at his retail store.

The loan interest was paid to his sister, Diana Farqi

Diana lent Dane $$100,000$ on July $1,2012$ at a rate of interest

$3$

of $10\%$ per annum. The interest is being calculated on a reducing balance basis. The interest is to be paid half$-$yearly on December $31$ and June $30.$ No interest was outstanding on July $1,2013.$ The principal is being paid equally over a $5$ year period on January $1,$ each year. The first principal payment was made on January $1,2013$ and the second principal payment was made on January $1,2014.$

Dane Farqi also accepts credit card payments from customers for the sale of goods. Credit card companies charge a commission of $2\%$ and remit the net amount to Dane Farqi.

Discounts received from trade creditors amounted to $$4,600$ and those allowed to debtors were $$8,750.$

Dane Farqi grants a credit period of $15$ days to trade debtors. The closing debtors balance includes a debt of $$2,000$ from Monica James who migrated to New Zealand. The debt is now outstanding for $1$ year and $4$ months. Another debtor, Erica Chin, is experiencing temporary financial difficulties and is unable to pay her debt of $$500.$ The debt is $150$ days overdue.

Dane Farqi lease stipulates a rental payment of $$15,000$ per month. No rental payment was outstanding or prepaid at the beginning of the financial year on July $1,2013.$

sublet the premises to his cousin Andrew Foster on May $1,2014$ for a monthly rental of $$2,000.$

A lawsuit for $$200,000$ was filed by Food Distributors Limited, a supplier, on May $15,2014.$ The supplier is claiming damages arising out of an alleged breach of contract for the sale of goods. The attorney for Dane Farqi is of the opinion that the plaintiff's claim is unlikely to succeed.

On September $15,2014$ Dane Farqi successfully negotiated a loan for $$500,000$ from Trinidad Finance Limited to build his own store on land that he owns.

Furniture costing $$10,000$ was sold on June $30,2014$ to Belinda Brown for $$8,000.$ The accumulated depreciation on the furniture disposed of was $$3,000.$ No furniture was acquired during the financial year ended June $30,2014.$ Depreciation is being provided on the straight line basis at a rate of $10\%$ per annum on cost$.$

$4$

$\backslash$table$[[,$June $30,2013,$June $30,2014],[,$$$,$$$],[$Stock at cost$,221,600,105,800],[$Trade debtors,$31,700,35,000],[$Accrued utilities,$1,800,2,200],[$Furniture $($at cost$),100,000,90,000],[$Accumulated depreciation,$20,000,27,000],[$Trade creditors,$30,560,26,200],[$Credit card receivables $($net$),1,470,2,744]]$

Stocks are valued at cost or net realizable value, whichever is lower. The accounts are prepared under the historical cost convention. All amounts are stated in Jamaican dollars.

Required:

$($a$)$ An Income Statement for the year ended June $30,2014.$

$($b$)$ A Balance Sheet as at June $30,2014.$

$($c$)$ A Statement of Cash Flows for the year ended June $30,2014.$

$($d$)$ Notes to the Financial Statements for the year ended June $30,2014.$

$5$