The following trial balance was extracted from the books of Rose Martins, a sole trader on 31 December 2005. Sh. Sh. Capital 2,880,000 Freehold land and buildings at cost 1,120,000 Motor vehicles at cost 1,094,000 Furniture and fittings at cost 240,000 Stock at 1 January 2005 960,000 Purchases and sales 9,408,000 11,088,000 Debtors and creditors 936,000 695,200 Discounts allowed and received 195,200 119,200 Returns inwards and outwards 16,000 28,800 Rent received 44,000 Loan (interest payable 5% per annum) 192,000 Interest on loan 4,800 Proceeds of sale of motor vehicle 150,000 Provision for doubtful debts 27,200 Bad debts 52,000 Wages and salaries 1,127,200 Drawings 256,000 General expenses 138,400 Bank balance 108,800 Rates and insurance 48,000 Provisions for depreciation: Furniture and fittings 160,000 Motor vehicle 320,000 15,704,400 15,704,400 Notes: Stock at 31 December 2005 was valued at Sh. 1,360,000. Included in general expenses is a sum of Sh. 26,400 being expenses on electricity for domestic use. A vehicle purchased on 1 January 2003 at Sh. 450,000 was sold for Sh. 150,000. The only record of the transaction is the credit of Sh. 150,000 to the proceeds of sale of motor vehicle account. As at 31 December 2005, wages and salaries outstanding amounted to Sh. 66,400. Prepaid rates and insurance as at 31 December 2005 stood at Sh. 12,000. Interest paid is only a half of the amount due for the year ended 31 December 2005. Provision for doubtful debts is to be adjusted to 5% of the debtors. Depreciation is to be provided for as follows: (i) Furniture and fittings at 5% on reducing balance method (ii) Motor vehicles at 20% on straight line method. Rent owing from a tenant who occupies a part of the building was Sh. 40,000 on 31 December 20005. Required: a) Profit and loss account for the year ended 31 December 2005. b) Balance sheet as at 31 December 2005.
The following
Sh. Sh.
Capital 2,880,000
Freehold land and buildings at cost 1,120,000
Motor vehicles at cost 1,094,000
Furniture and fittings at cost 240,000
Stock at 1 January 2005 960,000
Purchases and sales 9,408,000 11,088,000
Debtors and creditors 936,000 695,200
Discounts allowed and received 195,200 119,200
Returns inwards and outwards 16,000 28,800
Rent received 44,000
Loan (interest payable 5% per annum) 192,000
Interest on loan 4,800
Proceeds of sale of motor vehicle 150,000
Provision for doubtful debts 27,200
Bad debts 52,000
Wages and salaries 1,127,200
Drawings 256,000
General expenses 138,400
Bank balance 108,800
Rates and insurance 48,000
Provisions for
Furniture and fittings 160,000
Motor vehicle 320,000
15,704,400 15,704,400
Notes:
- Stock at 31 December 2005 was valued at Sh. 1,360,000.
- Included in general expenses is a sum of Sh. 26,400 being expenses on electricity for domestic use.
- A vehicle purchased on 1 January 2003 at Sh. 450,000 was sold for Sh. 150,000. The only record of the transaction is the credit of Sh. 150,000 to the proceeds of sale of motor vehicle account.
- As at 31 December 2005, wages and salaries outstanding amounted to Sh. 66,400.
- Prepaid rates and insurance as at 31 December 2005 stood at Sh. 12,000.
- Interest paid is only a half of the amount due for the year ended 31 December 2005.
- Provision for doubtful debts is to be adjusted to 5% of the debtors.
- Depreciation is to be provided for as follows:
(i) Furniture and fittings at 5% on
(ii) Motor vehicles at 20% on
- Rent owing from a tenant who occupies a part of the building was Sh. 40,000 on 31 December 20005.
Required:
- a)
Profit and loss account for the year ended 31 December 2005. - b) Balance sheet as at 31 December 2005.
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