Dauda, a retailer, does not keep proper books of account. The following were balances in his books on January 2013.
Premises 70,000
Equipment 8,200
Vehicles 5,100
Inventory 9,500
Accounts receivable 150
Bank 1400
The summary of his bank statement for the twelve months period from 1st January 2013 to 31st December 2013 is as follows:
Money paid to the bank: 96,500
Shop takings 1,400
Received from debtors 8,000
Payments made by cheque
Inventory purchased 70,500
Delivery Van 6,200
Maintenance of vehicle 1,020
Electricity and water 940
Store boys’ wages 5,260
Miscellaneous expenses 962
Additional information;
i. Dauda paid all shop takings for the year into the bank apart from monthly drawings of D500 and miscellaneous expenses of D408.
ii. He was owing, D7, 600 to supplies for inventory bought.
iii. The accounts receivable is to be treated as bad debts.
iv. Inventory was valued at D13,620
v. Depreciation for the year was calculated as D720 for equipment and D1,000 for vehicles.
You are required to prepare:
(a) Statement of Affairs as at 01/01/13
(b) Income Statement for the year ended 31st December 2013
Explanation
In the books of Dauda State of Affairs as at 1st January, 201
|
$ |
Assets: $ Premises 70,000 Equipment 8,200 Vehicle 5,100 Inventory 9,500 Acc receivable 150 Bank 1,400 94,350 |
(b) Dauda Income statement for the year ended 31st December 2013
D D
Sales (96,500+6,000+408+1,400) 104,308
Less: Cost of Sales
Opening inventory 9,500
Add Purchases (70,500+7,600) 78,100
87,600
Less closing inventory 13,620 (73,980)
Gross profit 30,328
Less: Expenses:
Store boy's wages 5,260
Maintenance of vehicle 1,020
Bad debts 150
Miscellaneous exp(962+408) 1,370
Electricity and water 940
Depreciation: equipment 720
vehicle 1,000 1,720 10,460
Net profit 19,868