- 12 Marks
FA – L1 – Q41 – Preparing financial statements of a sole trader
Question
The following list of account balances was extracted from the books of Kweku at 30 April 20X9.
| Dr GH¢(000) | Cr GH¢(000) | |
|---|---|---|
| Revenue | 18,955 | |
| Purchases | 12,556 | |
| Inventory 1 May 20X8 | 3,776 | |
| Salaries and wages | 2,447 | |
| Motor expenses | 664 | |
| Rent | 456 | |
| Rates | 120 | |
| Insurance | 146 | |
| Packing expenses | 276 | |
| Lighting and heating expenses | 665 | |
| Sundry expenses | 115 | |
| Motor vehicles | 2,400 | |
| Fixtures and fittings | 600 | |
| Trade receivables | 4,577 | |
| Trade payables | 3,045 | |
| Cash at bank | 3,876 | |
| Cash in hand | 120 | |
| Drawings | 2,050 | |
| Capital | 12,844 | |
| 34,844 | 34,844 |
Notes at 30 April:
(1) Expenses which have been prepaid – rates GH¢20,000; Insurance GH¢35,000.
(2) Expenses which are owing – motor expenses GH¢56,000; rent GH¢24,000; sundry expenses GH¢26,000.
(3) Inventory GH¢4,998,000.
Required:
From the list of balances and the notes, prepare Kweku’s statement of profit or loss for the year ended 30 April 20X9 and a statement of financial position at that date.
Answer
Statement of Profit or Loss for the Year Ended 30 April 20X9
| Description | GH¢(000) | GH¢(000) |
|---|---|---|
| Revenue | 18,955 | |
| Opening inventory | 3,776 | |
| Purchases | 12,556 | |
| 16,332 | ||
| Less Closing inventory | 4,998 | |
| Cost of sales | 11,334 | |
| Gross profit | 7,621 | |
| Less Expenses | ||
| Insurance (146 – 35) | 111 | |
| Lighting and heating | 665 | |
| Motor expenses (664 + 56) | 720 | |
| Packing expenses | 276 | |
| Rates (120 – 20) | 100 | |
| Rent (456 + 24) | 480 | |
| Salaries | 2,447 | |
| Sundry expenses (115 + 26) | 141 | |
| 4,940 | ||
| Net profit | 2,681 |
Statement of Financial Position at 30 April 20X9
| Description | GH¢(000) | GH¢(000) |
|---|---|---|
| Non-current assets | ||
| Fixtures and fittings | 600 | |
| Motor vehicles | 2,400 | |
| 3,000 | ||
| Current assets | ||
| Inventory | 4,998 | |
| Trade receivables | 4,577 | |
| Prepayments (20 + 35) | 55 | |
| Bank | 3,876 | |
| Cash | 120 | |
| 13,626 | ||
| Total assets | 16,626 | |
| Capital account | ||
| Opening capital | 12,844 | |
| Add Profit for year | 2,681 | |
| 15,525 | ||
| Less Drawings | (2,050) | |
| 13,475 | ||
| Current liabilities | ||
| Trade payables | 3,045 | |
| Accrued expenses (56 + 24 + 26) | 106 | |
| 3,151 | ||
| Total capital and liabilities | 16,626 |
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