Jean Smith, who retails wooden ornaments, has been so busy since she commenced business on 1 April 2015 that she has neglected to keep adequate accounting records. Jean's opening capital consisted of her life savings of £15,000 which she used to open a business bank account. The transactions in this bank account during the year ended 31 March 2016 have been summarised from the bank account as follows:

According to the bank account, the balance in hand on 31 March 2016 was £4,090 in Jean Smith's favour.

 While the intention wasto bank all takings intact, it now transpires that, in addition to cash drawings, the following payments were made out of takings before bankings:

On 31 March 2016, takings of £640 awaited banking; this was done on 1 April 2016. It has been discovered that amounts paid into the bank of £340 on 29 March 2016 were not credited to Jean's bank account until 2 April 2016 and a cheque of £120, drawn on 28 March 2016 for purchases, was not paid until 10 April 2016. The normal rate of gross profit on the goods sold by Jean Smith is 50% on sales. However, during the year a purchase of ornamental goldfish costing £600 proved to be unpopular with customers and therefore the entire inventory had to be sold at cost price.

Interest at the rate of 5% per annum is payable on each anniversary of the loan from John Peacock on 1 January 2016.

 Depreciation is to be provided on the van on a straight-line basis; it is estimated that the van will be disposed of after five years' use for £100.

The inventory of goods for resale at 31 March 2016 has been valued at a cost at £1,900. Accounts payable for purchases at 31 March 2016 amounted to £880 and electricity charges accrued due at that date were £180. Trade accounts receivable at 31 March 2016 totaled £2,300.

Required:

Prepare a statement of profit or loss for the year ending 31 March 2016 and a statement of financial position as at that date.

 

Transcribed Image Text:

Receipts: Loan from John Peacock, uncle Takings Payments: Purchases of goods for resale Electricity for period to 31 December 2015 Rent of premises for 15 months to 30 June 2016 Rates of premises for the year ended 31 March 2016 Wages of assistants Purchase of van, 1 October 2015 Purchase of holiday caravan for Jean Smith's private use Van licence and insurance, payments covering a year 10,000 42,000 26,400 760 3,500 1,200 14,700 7,600 8,500 250 Receipts: Loan from John Peacock, uncle Takings Payments: Purchases of goods for resale Electricity for period to 31 December 2015 Rent of premises for 15 months to 30 June 2016 Rates of premises for the year ended 31 March 2016 Wages of assistants Purchase of van, 1 October 2015 Purchase of holiday caravan for Jean Smith's private use Van licence and insurance, payments covering a year 10,000 42,000 26,400 760 3,500 1,200 14,700 7,600 8,500 250

Answer rating: 100% (QA)

Jean Smith Profit and Loss Ac for the Year ended 3103206 Purticulars Amount Purticulars Amount To By ... View the full answer