- 20 Marks
FA – L1 – Q97 – Preparation of accounts from incomplete records
Question
ANSAH VENTURES
Kwame Ansah is a vehicle spare parts dealer in Kumawu. He pays into his bank account the amount of his cash takings after keeping an amount of GH¢2,000 per week for personal use and after payment of wages and other expenses, which for the accounting period ending 31st December 20X9, were as follows:
| Expenses | GH¢ |
|---|---|
| Staff wages | 1,440 |
| Goods | 120,580 |
| Cleaning | 1,200 |
| Carriage | 600 |
| Sundry | 5,000 |
The following are his bank transactions:
| Bank Transactions | GH¢ |
|---|---|
| Income tax | 3,000 |
| Telephone | 650 |
| Bank lodgements | 15,000 |
| Cash sales | 6,000 |
| Bulk sales (cheques) | 10,000 |
| Treasury bill interest | 5,000 |
| Payments to suppliers | 15,000 |
| Rent | 11,000 |
| Electricity | 650 |
| Balance as at 1st January 20X9 | 6,000 |
The following additional information was also provided:
| Assets and Liabilities | 01/01/20X9 (GH¢) | 31/12/20X9 (GH¢) |
|---|---|---|
| Furniture & fittings | 1,200 | 1,200 |
| Stocks in trade | 10,500 | 7,650 |
| Payables – Goods purchased | 1,670 | 2,750 |
| Payables – Rent | 5,000 | 6,000 |
| Payables – Electricity | 500 | 650 |
| Payables – Telephone | 150 | 200 |
| Payables – Accountancy fee | – | 750 |
| Treasury bills | 10,000 | 15,000 |
| Receivables – Bulk sales | 8,000 | 15,000 |
Required:
(i) Prepare statement of profit or loss for the year ending 31st December 20X9. (10 marks)
(ii) Prepare statement of affairs as at 1st January 20X9. (2 marks)
(iii) Prepare statement of financial position as at 31st December 20X9. (8 marks)
Answer
(a) (i) Statement of profit or loss for the year ended 31st December, 20X9
| Description | GH¢ | GH¢ |
|---|---|---|
| Sales | 129,810 | |
| Less Cost of sales: | ||
| Opening Inventory | 10,500 | |
| Add Purchases | 120,580 | |
| Carriage | 600 | |
| 131,680 | ||
| Less Closing inventory | (7,650) | |
| (124,030) | ||
| Gross Profit | 5,780 | |
| Add Treasury bill Interest | 5,000 | |
| 10,780 | ||
| Less Expenses: | ||
| Staff wages | 1,440 | |
| Cleaning | 1,200 | |
| Sundry | 5,000 | |
| Telephone (600 + 200 – 150) | 650 | |
| Rent (10,000 + 6,000 – 5,000) | 11,000 | |
| Electricity (500 + 650 – 500) | 650 | |
| Accountancy fees | 750 | |
| Depreciation (furniture & fittings) | 100 | |
| (20,790) | ||
| Net profit before tax | 114,020 | |
| Income tax | (3,000) | |
| Net profit after tax | 111,020 |
(ii) Statement of affairs as at 1st January, 20X9
| Description | GH¢ | GH¢ |
|---|---|---|
| Assets | ||
| Furniture & fittings | 1,200 | |
| Bank balance | 6,000 | |
| Treasury bills | 10,000 | |
| Receivables – bulk sales | 8,000 | |
| Inventory | 10,500 | |
| 35,700 | ||
| Less current liabilities | ||
| Payables – Goods | 1,670 | |
| Rent | 5,000 | |
| Electricity | 500 | |
| Telephone | 150 | |
| (7,320) | ||
| Capital | 28,380 |
(iii) Statement of financial position as at 31st December, 20X9
| Description | GH¢ | GH¢ |
|---|---|---|
| Non-current assets | ||
| Furniture & fittings | 1,100 | |
| Current assets | ||
| Inventory | 7,650 | |
| Receivables | 15,000 | |
| Treasury bills | 15,000 | |
| Bank balance | 6,350 | |
| 43,000 | ||
| 44,100 | ||
| Financed by: | ||
| Capital | ||
| Opening Capital | 28,380 | |
| Add net profit after tax | 111,020 | |
| 139,400 | ||
| Less Drawings | (104,000) | |
| 35,400 | ||
| Current liabilities | ||
| Payables – goods | 2,750 | |
| Rent | 6,000 | |
| Electricity | 650 | |
| Telephone | 200 | |
| Accountancy fees | 750 | |
| 9,350 | ||
| 44,750 |
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