- 15 Marks
FA – L1 – Q39 – Preparing financial statements of a sole trader
Question
JOHNNY
Johnny is in business as an antique dealer. The trial balance of his business at 1 January 20X9 was as follows.
| Dr GH₵(000) | Cr GH₵(000) | |
|---|---|---|
| Capital | 5,000 | |
| Cash | 4,200 | |
| Motor van | 600 | |
| Trade payable – A | 200 | |
| Trade receivable – B | 300 | |
| Rates prepaid | 100 | |
| 5,200 | 5,200 |
Cash transactions during the period to 31 March 20X9 were
| GH₵(000) | |
|---|---|
| Purchases | 2,000 |
| Revenue | 3,000 |
| Drawings | 500 |
| Motor running expenses | 350 |
| Rates | 250 |
At 31 March inventory was GH₵700,000 and rates paid in advance amounted to GH₵150,000.
Required
(a) Prepare the trial balance at 31 March 20X9.
(b) Prepare the statement of profit or loss for the period to 31 March 20X9 and a statement of financial position at that date.
Answer
JOHNNY
(a) Trial balance at 31 March 20X9
| Dr GH₵(000) | Cr GH₵(000) | |
|---|---|---|
| Capital | 5,000 | |
| Cash at bank (W) | 1,100 | |
| Motor van | 600 | |
| Trade payable – A | 200 | |
| Trade receivable – B | 300 | |
| Rates | 200 | |
| Purchases | 2,000 | |
| Revenue | 3,000 | |
| Drawings | 500 | |
| Motor running expenses | 350 | |
| WORKING | ||
| Bank a/c | ||
| GH₵(000) | ||
| Balance b/d | 4,200 | Purchases a/c |
| Revenue a/c | 3,000 | Drawings a/c |
| Motor running expenses a/c | ||
| Rates a/c | ||
| Balance c/d | ||
| 7,200 |
JOHNNY
(b) Statement of profit or loss for the period to 31 March 20X9
| GH₵(000) | |
|---|---|
| Revenue | 3,000 |
| Less: Cost of sales | |
| Purchases | 2,000 |
| Less: Closing inventory | (700) |
| 1,300 | |
| Gross profit | 1,700 |
| Less: Expenses | |
| Motor running expenses | 350 |
| Rates (100 + 250 – 150) | 200 |
| 550 | |
| Net profit | 1,150 |
Statement of financial position at 31 March 20X9
| GH₵(000) | |
|---|---|
| Non-current assets | |
| Motor van | 600 |
| Current assets | |
| Inventory | 700 |
| Trade receivables | 300 |
| Prepayment | 150 |
| Cash | 1,100 |
| 2,250 | |
| Total assets | 2,850 |
| Capital account | |
| At 1 January | 5,000 |
| Add Net profit for the period | 1,150 |
| 6,150 | |
| Less Drawings | (500) |
| 5,650 | |
| Current liabilities | |
| Trade payables | 200 |
| Total capital and liabilities | 5,850 |
- Uploader: Samuel Duah