Prepare a trading profit and loss account Information The following Trial Balance was extracted from the books
Question:
Prepare a trading profit and loss account
Information
The following Trial Balance was extracted from the books of Johnny Smith, a sole trader on December 31, 2014:Trial Balance as at December 31, 2014
Details/Accounts | $ | $ |
Return inwards | 100,000 | |
Cash | 150,000 | |
Accounts receivable | 3,250,000 | |
Salaries | 1,800,000 | |
Motor vehicle repairs | 185,000 | |
Insurance | 75,000 | |
Return outwards | 70,000 | |
Cash drawings | 250,000 | |
Bank | 140,000 | |
Bad debts | 132,500 | |
Sales | 9,600,000 | |
Discount allowed | 155,000 | |
Machinery | 2,750,000 | |
Accumulated depreciation on machinery | 412,500 | |
Stock, January 1, 2014 | 1,500,000 | |
Commission received | 150,000 | |
Carriage inwards | 125,000 | |
Electricity | 480,000 | |
Furniture and fittings | 900,000 | |
Purchases | 3,820,000 | |
Discount received | 240,000 | |
Stationery | 200,000 | |
Capital | 5,495,000 | |
Motor vehicles | 2,500,000 | |
Provision for depreciation on motor vehicles | 250,000 | |
Accounts payable | 2,100,000 | |
Rent | 210,000 | |
Provision for bad and doubtful debts | 125,000 | |
18,582,500 | 18,582,500 |
Notes:
(i) Stock on December 31, 2014 was valued at $2,000,000.
(ii) Commission receivable amounting to $75,000 was not entered to the account as at December 31, 2014.
(iii) Carriage inwards of $25,000 was owed at the end of the accounting period.
(iv) On December 31, 2014 Johnny Smith paid the amount of $40,000 for stationery to be received during the next year.
(v) The provision for bad and doubtful debts is to be adjusted to 5% of accounts receivable.
(vi) Depreciation is to be charged as follows: Machinery 10% pa. straight line; Furniture and fittings 10% pa. straight line method; and motor vehicles 20% pa reducing balance.