A J Wright, a sole trader, extracted the following trial balance from his books at the close of business on 31 March 20X9:

28.10A J Wright, a sole trader, extracted the following trial balance from his books at the close of business on 31 March 20X9:

Dr Cr £

£ Purchases and sales

61,420 127,245 Stock 1 April 20X8

7,940 Capital 1 April 20X8

25,200 Bank overdraft

2,490 Cash

140 Discounts

2,480 62 Returns inwards

3,486 Returns outwards

1,356 Carriage outwards

3,210 Rent and insurance

8,870 Provision for doubtful debts

Fixtures and fittings 1,900 Van

5,600 Debtors and creditors

12,418 11,400 Drawings

21,400 Wages and salaries

39,200 General office expenses

168,383 Notes:

(a) Stock 31 March 20X9 £6,805. (b) Wages and salaries accrued at 31 March 20X9 £3,500; Office expenses owing £16. (c) Rent prepaid 31 March 20X9 £600. (d) Increase the provision for doubtful debts by £110 to £740. (e) Provide for depreciation as follows: Fixtures and fittings £190; Van £1,400.

Chapter 28 l Accruals and prepayments and other adjustments for financial statements

Required:

Prepare the trading and profit and loss accounts for the year ended 31 March 20X9 together with a balance sheet as at that date.

28.11 This question also relates to extended trial balances (see Exhibit 28.2) From the following trial balance of John Brown, store owner, prepare a trading account and profit and loss account for the year ended 31 December 20X7, and a balance sheet as at that date, taking into consideration the adjustments shown below:

Trial Balance as at 31 December 20X7

350,000 Sales returns

5,000 Purchases returns

6,200 Opening stock at 1 January 20X7

100,000 Provision for doubtful debts

800 Wages and salaries

30,000 Rates

6,000 Telephone

1,000 Shop fittings at cost

40,000 Van at cost

30,000 Debtors and creditors

9,800 7,000 Bad debts

200 Capital

179,000 Bank balance

3,000 Drawings

593,000 (i) Closing stock at 31 December 20X7 £120,000.

(ii) Accrued wages £5,000. (iii) Rates prepaid £500. (iv) The provision for doubtful debts to be increased to 10 per cent of debtors. (v) Telephone account outstanding £220. (vi) Depreciate shop fittings at 10 per cent per annum, and van at 20 per cent per annum, on cost.

28.12A The following trial balance has been extracted from the ledger of Mr Yousef, a sole trader.

Trial Balance as at 31 May 20X6

7,800 Rent, rates and insurance

6,622 Postage and stationery

3,001 Advertising

1,330 Salaries and wages

26,420 Bad debts

Part 4 l Adjustments for financial statements

‘ Provision for doubtful debts

130 Debtors

12,120 Creditors

6,471 Cash in hand

177 Cash at bank

1,002 Stock as at 1 June 20X5

11,927 Equipment at cost

58,000 accumulated depreciation

19,000 Capital

216,770 The following additional information as at 31 May 20X6 is available: (a) Rent is accrued by £210.

(b) Rates have been prepaid by £880. (c) £2,211 of carriage represents carriage inwards on purchases. (d) Equipment is to be depreciated at 15% per annum using the straight line method. (e) The provision for doubtful debts to be increased by £40. (f ) Stock at the close of business has been valued at £13,551.

Required:

Prepare a trading and profit and loss account for the year ended 31 May 20X6 and a balance sheet as at that date.

(Association of Accounting Technicians)

28.13 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.

£ 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

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

Chapter 28 l Accruals and prepayments and other adjustments for financial statements

The following additional information as at 30 April 20X7 is available: (a) Stock at the close of business was valued at £17,750.

(b) Insurances have been prepaid by £1,120. (c) Heating and lighting is accrued by £1,360. (d) Rates have been prepaid by £5,435. (e) The provision for doubtful debts is to be adjusted so that it is 3% of trade debtors.

Required:

Prepare Mr Chai’s trading and profit and loss account for the year ended 30 April 20X7 and a bal- ance sheet as at that date.

(Association of Accounting Technicians)

You can find a range of additional self-test questions, as well as material to help you with your studies, on the website that accompanies this book at www.pearsoned.co.uk/wood

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