Mr. Chai has been trading for some years as a wine merchant. The following list of balances has been extracted from his ledger as at 30 April 20X7, the end of his most recent financial year. Ghc

Capital 83,887

Sales 259,870

Trade creditors 19,840

Returns out 13,407

Provision for doubtful debts 512

Discounts allowed 2,306

Discounts received 1,750

Purchases 135,680

Returns inwards 5,624

Carriage outwards 4,562

Drawings 18,440
Carriage inwards 11,830
Rent, rates and insurance 25,973
Heating and lighting 11,010
Postage, stationery and telephone 2,410
Advertising 5,980
Salaries and wages 38,521
Bad debts 2,008
Cash in hand 534
Cash at bank 4,440
Stock as at 1 May 20X6 15,654
Trade debtors 24,500
Fixtures and fittings – at cost 120,740
Provision for depreciation on fixtures and fittings – as at 30 April 20X7 63,020
Depreciation 12,074

The following additional information as at 30 April 20X7 is available: Stock at the close of business was valued at Ghc17,750.Insurances have been prepaid by Ghc1,120.Heating and lighting is accrued by Ghc1,360.Rates have been prepaid by Ghc5,435.The provision for doubtful debts is to be adjusted so that it is 3% of trade debtors. 

Required:

Prepare Mr. Chai’s income statement for the year ended 30 April 20X7 and a statement of financial position as at that date.

Answer rating: 100% (QA)

MrChais Trading and Profit and Loss Account for the year ended 30 April 20X7 Part... View the full answer