- 6 Marks
FA – L1 – Q9 – Preparing financial statements of a sole trader
Question
The following information is available for Kwame’s business for the year ended 31 December. He started his business on 1 January.
| GH¢’000 | |
|---|---|
| Trade payables | 1,206 |
| Trade receivables | 3,166 |
| Purchases | 23,803 |
| Revenue | 28,794 |
| Motor van | 5,500 |
| Drawings | 2,400 |
| Insurance | 105 |
| General expenses | 506 |
| Rent and rates | 854 |
| Salaries | 3,164 |
| Inventory at 31 December | 4,166 |
| Sales returns | 50 |
| Cash at bank | 3,847 |
| Cash in hand | 100 |
| Capital introduced | 65,900 |
Required:
Prepare a statement of profit or loss for the year ended 31 December and a statement of financial position at that date.
Answer
Statement of profit or loss for the year ended 31 December
| GH¢’000 | GH¢’000 | |
|---|---|---|
| Sales | 28,794 | |
| Opening inventory | 0 | |
| Purchases | 23,803 | |
| Less: Closing inventory | (4,166) | |
| Cost of sales | (19,637) | |
| Gross profit | 9,157 | |
| Salaries and wages | 3,164 | |
| Rent | 854 | |
| Insurance | 105 | |
| Lighting and heating expenses | 422 | |
| Sundry expenses | 506 | |
| Motor running expenses | 1,133 | |
| (6,184) | ||
| Net profit | 2,973 |
Statement of financial position as at 31 December
| GH¢’000 | GH¢’000 | |
|---|---|---|
| Non-current assets | ||
| Land and buildings | 50,000 | |
| Fixtures and fittings | 1,000 | |
| Motor vans | 5,500 | |
| 56,500 | ||
| Current assets | ||
| Inventory | 4,166 | |
| Receivables | 3,166 | |
| Cash at bank | 3,847 | |
| Cash in hand | 100 | |
| 11,279 | ||
| Total assets | 67,779 | |
| Capital | ||
| Capital introduced | 65,900 | |
| Add: Net profit | 2,973 | |
| 68,873 | ||
| Less: Drawings | (2,400) | |
| 66,473 | ||
| Current liabilities | ||
| Payables | 1,306 | |
| Total capital and liabilities | 67,779 |
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