PRINCIPLES ACCOUNTING
BA1102
School of Business, UTB
Tutorial
Preparing Financial Statements of Sole Traders (Part 2)
Black & Al-Kilani
Chapter 4
1. Self-check questions
2. Self-study questions
- 4.1 (Blue Trader)
- 4.2
- 4.3
- 4.4
Question 1: DELALANDE
Delalande’s trial balance as at 30 April 2022 was as follows:
$
Capital account as at 01 May 2021
Bank financing (repayable in 6 years)
Creditors
Debtors
Purchases
Sales
Bank
Vehicles on 01 May 2021
Provision for depreciation 01 May 2021
Inventory as at 01 May 2021
Equipment on 01 May 2021
Provision for depreciation on 01 May 2021
Salaries
Rent
Insurance
Commission
General expenses
Discounts
Sales returns
Purchases returns
Carriage outwards
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$
50,000
30,000
22,000
44,750
181,000
227,100
11,000
42,100
24,339
46,000
25,500
20,400
26,250
14,500
27,500
10,500
24,739
3,700
6,800
14,800
6,900
3,200
431,539
431,539
PRINCIPLES ACCOUNTING
BA1102
School of Business, UTB
Tutorial
Preparing Financial Statements of Sole Traders (Part 2)
Question 1: DELALANDE (continued)
The following information has not been entered in the books:
1. Inventory as at 30 April 2022 was valued at $46,000.
2. Delalande bought goods for resale worth $6,700 on credit.
3. The equipment which were bought on 01 July 2017 were sold at $4,000 cash during
the year ended 30 April 2022.
The firm’s policy is to depreciate equipment and vehicles at the rate of 20% per
annum on straight-line basis and 25% per annum on reducing balance method
respectively.
A full year’s depreciation is provided in the year of purchase and none in the year
of disposal.
4. Salaries payable but owing amounted to $1,250.
5. Rent is paid in advance for 5 months up to 30 September 2022 amounted to $5,000
6. Insurance for the year was $26,500.
7. Commission accrued during the year was $3,600.
8. $700 has been paid for general expenses but has not been accounted for in the
books.
9. 4% of remaining debtors is considered irrecoverable.
10. Additional capital of $10,000 was introduced into the business.
11. Drawings during the year was $3,000.
Prepare Delalande’s income statement for the year ended on 30 April 2022 and
statement of financial position as at that date after considering the above
adjustments. [Where necessary, round off answers to whole number]
[Gross profit = $39,500; Net loss = $15,769; Net assets / Capital = $41,231]
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PRINCIPLES ACCOUNTING
BA1102
School of Business, UTB
Tutorial
Preparing Financial Statements of Sole Traders (Part 2)
Question 2: BLINKEN
Blinken’s trial balance as at 31 December 2022 was as follows:
$
Motor vehicles at cost at 01 January 2022
Motor vehicles, accumulated depreciation at 01 January
2022
Debtors
Purchases
Stock as at 01 January 2022
Drawings
Sales
Salaries
Miscellaneous bills
Other income
Rental
Discount allowed
Discount received
Capital at 01 January 2022
Creditors
Bank
Bad debts
Return inwards
Return outwards
Freight inwards
Freight outwards
Financing (repayable in 5 years)
90,000
43,920
80,500
80,000
20,000
35,000
141,580
47,500
30,000
70,000
44,000
5,500
7,800
52,500
90,000
20,000
3,300
3,600
5,000
600
800
460,800
35
$
50,000
460,800
PRINCIPLES ACCOUNTING
BA1102
School of Business, UTB
Tutorial
Preparing Financial Statements of Sole Traders (Part 2)
Question 2: BLINKEN (continued)
The following information is relevant:
1. Stock at 31 December 2022 was valued at $50,000
2. Blinken introduced $6,000 additional capital into the business by cheque.
3. A motor vehicle was bought on 03 May 2018 for $48,000. Due to the high cost of
repairs and maintenance, it was sold for $25,000 in cash on 30 June 2022. On 31
December 2022, the book value of the vehicle was $19,661.
Blinken estimates that the motor vehicles will lose 20% of its net book value each
year. Depreciation is provided for a full year in the year of purchase; none in the
year of disposal.
4. Salaries unpaid amounted to $7,000.
5. Miscellaneous bills include prepaid amount of $10,000.
6. Other income includes payment of $20,600 covering period of 3 months up to 31
March 2023.
7. Blinken withdrew $2,700 from business bank account to pay for his living
expenses.
8. Purchased goods on credit from Tree Sdn. Bhd. for $5,400.
9. Petrol for motor vehicles belonging to the business of $200 has been paid by cash.
10. Unexpectedly, $300 of the amount charged as bad debts managed to be collected.
11. Additional $500 worth of debtors have not chance of being repaid and should be
written off.
Prepare Blinken’s income statement for the year ended on 31 December 2022
and statement of financial position as at that date after taking into account the
above adjustments. [Where necessary, round off answers to whole number]
[Gross profit = $86,980; Net profit = $15,735; Net assets / Capital = $36,535]
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