Kerry Lyn, a sole trader, has asked you to assist her in preparing her financial statements. She
Question:
Kerry Lyn, a sole trader, has asked you to assist her in preparing her financial statements. She operates a small wholesale business in Kingston and has presented you with the following Trial Balance as at December 31, 2019: Details DR CR Provision for bad and doubtful debts - 102,000 Accounts Receivable 600,000 - Provision for depreciation: Computer - 52,500 Computer 562,500 - Provision for depreciation: Fixtures and Fittings - 39,000 Fixtures and Fittings 300,000 - Provision for depreciation: Motor Vehicle - 72,000 Motor Vehicle 1,275,000 - Capital - 1,500,000 Return outwards - 82,500 Sales - 2,250,000 Commission received - 105,000 Discounts received - 100,500 Accounts payable - 10,500 Loan - 225,000 Purchases 300,000 - Return Inwards 25,500 - Carriage inwards 30,000 - Carriage outwards 27,000 - Rent 223,500 - Utility Expenses 282,000 - Discounts allowed 18,000 - Salaries 135,750 - Insurance 70,500 - Sundries 18,000 - Drawings 75,000 - Cash in hand 433,500 - Stock at January, 1, 2019 162,750 - 4,539,000 4,539,000 (See notes on next page.)
Notes: i. Closing stock was $35,000. ii. Depreciation is to be charged as follows: Computer 6% on cost, Fixtures and Fittings 5% reducing balance method and Motor Vehicle 10% reducing balannce method. iii. Provision for bad and doubtful debt is to be adjusted to 4% of Accounts Receivables. iv. On December 31, 2019, $3,500 was outstanding for Salaries. v. $7,000 of Insurance paid relates to January1, 2020.
You are required to prepare the income statement and the balance sheet in a table format
Auditing and Assurance services an integrated approach
ISBN: 978-0132575959
14th Edition
Authors: Alvin a. arens, Randal j. elder, Mark s. Beasley