Illustration of balance sheet, Financial Accounting

Illustration of balance sheet

The following list of balances as at 30 September 20X9 has been extracted from the books of Brick and Stone, trading in partnership, sharing the balance of profits and losses in the proportions 3:2 respectively.

 

 

Kshs.

Printing, stationery and postages

3,500

Sales

322,100

Inventory in hand at 1 October 20x8

23,000

Purchases

208,200

Rent and rates

10,300

Heat and light

8,700

Staff salaries

36,100

Telephone charges

2,900

Motor vehicle running costs

5,620

Discounts allowable

950

Discounts receivable

370

Sales returns

2,100

Purchases returns

6,100

Carriage inwards

1,700

Carriage outwards

2,400

Fixtures and fittings: at cost

26,000

Provision for depreciation

11,200

Motor vehicles: at cost

46,000

Provision for depreciation

25,000

Provision for doubtful debts

300

Drawings: Brick

24,000

                 Stone

11,000

Current Account balances at 1 October 20x8:

 

                 Brick

3,600

                 Stone

2,400

Capital account balances at 1 October 20x8:

 

                 Brick

33,000

                 Stone

17,000

Receivables

9,300

Payables

8,400

Balance at bank

7,700

 

Additional information:

1.          Kshs.10,000 is to be transferred from Brick’s capital account to a newly opened Brick Loan Account on 1 July 20X9.  Interest at 10 per cent per annum on the loan is to be credited to Brick.

2.          Stone is to be credited with a salary at the rate of Kshs.12,000 per annum from 1 April 20X9.

3.          Inventory  in hand at 30 September 20X9 has been valued at cost at Kshs.32,000.

4.          Telephone charges accrued due at 30 September 20X9 amounted to Kshs.400 and rent of Kshs.600 prepaid at that date.

5.          During the year ended 30 September 20X9 Stone has taken goods costing Kshs.1,000 for his own use.

6.          Depreciation is to be provided at the following annual rates on the straight line basis:

 

Fixtures and fittings                               10%

Motor Vehicles                                      20%

 

Required:

(a)        Prepare a trading and profit and loss account for the year ended 30 September 20X9.

(b)       Prepare a balance sheet as at 30 September 20X9 which should include summaries of the partner’s capital and current accounts for the year ended on that date.

 

Note:  In both (a) and (b) vertical forms of presentation should be used.

Solution:

a)       

Brick and Stone

Trading Profit and Loss Account for the year ended 30 September 20X9

 

Kshs.

Kshs.

Kshs.

Sales

 

 

322,100.00

Less sales returns

 

 

(2,100.00)

 

 

 

320,000.00

Less cost of sales

 

 

 

Opening inventory

 

23,000.00

 

Purchases

207,200.00

 

 

Carriage inwards

1,700.00

 

 

 

208,900.00

 

 

Less purchases returns

(6,100.00)

202,800.00

 

 

 

225,800.00

 

Less closing inventory

 

(32,000.00)

(193,800.00)

Gross Profit

 

 

126,200.00

Discounts receivable

 

 

370.00

 

 

 

126,570.00

Less Expenses:

 

 

 

Printing, stationery and postages

 

3,500.00

 

Rent and rates

 

9,700.00

 

Heat and light

 

8,700.00

 

Staff salaries

 

36,100.00

 

Telephone charges

 

3,300.00

 

Motor vehicle running costs

 

5,620.00

 

Discounts allowable

 

950.00

 

Carriage outwards

 

2,400.00

 

Depreciation: Fixtures and fittings

 

2,600.00

 

                      Motor vehicles

 

9,200.00

 

Loan – Brick

 

250.00

(82,320.00)

Net profit

 

 

44,250.00

Less Salary – Stone

 

 

(6,000.00)

 

 

 

38,250.00

Balance of profits shared in PSR

 

 

 

                  Brick

 

22,950.00

 

                  Stone

 

15,300.00

(38,250.00)

b)       

Brick and Stone

Balance Sheet as at 30 September 20X9

 

Cost

Accumulated Depreciation

NBV

Non Current assets

Kshs.

Kshs.

Kshs.

Fixtures and fittings

26,000.00

(13,800.00)

12,200.00

Motor vehicles

46,000.00

(34,200.00)

11,800.00

 

72,000.00

(48,000.00)

24,000.00

Current Assets

 

 

 

Inventory

 

32,000.00

 

Receivables

9,300.00

 

 

Less provision for doubtful debts

(300.00)

9,000.00

 

Prepaid expenses

 

600.00

 

Balance at bank

 

7,700.00

 

 

 

49,300.00

 

Current liabilities

 

 

 

Payables

8,400.00

 

 

Accrued expenses

400.00

(8,800.00)

 

Net working capital

 

 

40,500.00

 

 

 

64,500.00

Capital accounts

 

 

 

         Brick

 

23,000.00

 

          Stone

 

17,000.00

40,000.00

Current Account

 

 

 

          Brick

 

2,800.00

 

          Stone

 

11,700.00

14,500.00

 

 

 

54,500.00

Loan Account

 

 

10,000.00

 

 

 

64,500.00

 

                                                                    Current Account

 

Brick

Stone

 

Brick

Stone

 

Kshs.

Kshs.

 

Kshs.

Kshs.

Drawings

24,000.00

12,000.00

Balance b/f

3,600.00

2,400.00

 

 

 

Interest/salary

250.00

6,000.00

Bal c/d

2,800.00

11,700.00

Profit share

22,950.00

15,300.00

 

26,800.00

23,700.00

 

26,800.00

23,700.00

 

 

 

Posted Date: 12/11/2012 5:58:56 AM | Location : United States







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