Question

QUESTION ONE (50 marks) Smith has been trading of fashion women accessories for some years. The following list of balances has been extracted from his ledger as at 31 March 2019. Rent, rates and insurance Electricity paid Postages and stationery Advertising Salaries and wages Bank interest expenses Cash in hand Stock at 1 April 2018 Debtors Fixtures and fittings at cost Accumulated depreciation at 1 April 2018 Sales Creditors Purchases Office equipments at cost Accumulated depreciation at 1 April 2018 Share capital 5 years bank loan at interest rate of 20% p.a. 15,000 6,000 800 36,500 35,000 3,500 100 5,000 9,000 9,000 1,800 150,000 9,680 100,000 5,000 500 52,920 10,000 The following additional information as at 31 March 2019 includes: 1. Stock at 31 Mar 2019 was valued at $50,000. 2. An electricity bill of $300 for Jan 2019 was received. This bill has not yet been

Answer 1

Solutions Pake Mo. 2 800 1.500 2019 Yooo Potage and stationery Bad Debts Told Expenses (B) kerning before Interest & Tones (A-B) less Interest Expense 9400 96,200 - 1200 - 3500 Toxes - 4700 55,000 Met karungs Balance sheet as on 31 March, 2019 ($) Pope Mo. I Smith Statement of Profit & los as on 314 March 2014 (9) Renenue (Sales) 150,000 less: Gost of Goods Sold Opening Stock 5,000 → Ads:- Purchases 100,000 less: Chring Stak (59000) Greass Persit (A) 95,000 teas Setting & Marketing Expenses Advertising 36,500 loss. Referiatin expenses Depreciation on Furniture & Fillings 1,800 (9,000x206) Depreciation an Office Equipment 500 (Sooox 100) Salaries and Mages 35.000 Other Eapenses fent, Rates and Insurance 15000 (1,206) Less: Advance fent 13,800 Electwrity Expenses Addi-turned electercity bufones 300 6,300 Page Me 3 Office Guipmenti 5000 less: Accumulated Depreciation as on 31.3.19 (500+500) (1poo) Total Assets Mon Current (B) Total Assets (A+B) 68,200 Liabilities and Queneris Equity Current Liabilities acditors 9,680 Electarcity Bill Purable Total Current liabilities (A) 1980 long-team liabilities 5 years Bank loan Total long team liabilities (B7 QoOo Equity Capital Share Capital 52,920 Comprehensive suisuelas ( oo) Total Ourer's Repuity (c) 48,220 Total Liabilities and Omener's Equity (A+B+C) 68,200 b) Mr. Smith is incurrent alsof $4900 during the year Me. Smith should tay and increase sales by marketing and cut down his expenses so that overall profut can be increased, Assets Current Assets 10,000 100 Cash Debtors less- Bad Delds 9,000 (1,500) 7,500 Inventory less- 50,000 1,200 Adnance feat - Acets (A) 58,800 6 oco Total Carrent Assets (A) Man-Current Assets fixtures and fittings na 9000 less: Accumulated Depacciation as on 31.3.14 on (2 (1800-1800) (3,600 (96oo) chants 5,400