COURSE WORK In initial financial year ended at 31, March, 2020 Enter the following transactions in the ledgers 1 The company Suzi Ltd established the business with capital 50,000 shares of £ 1 at par.
COURSE WORK In initial financial year ended at 31, March, 2020 Enter the following transactions in the ledgers The company Suzi Ltd established the business with capital 50,000 shares of £ at par and receives full payment on issue Bought lands & building for £ 12,000, paying by cheque £12,000 Bought motor van for £10,000, paying by cheque £10,000 Bought material for £500 on credit from Ann Sales £5,800 Bought goods on credit from Winston £8000 Paid for machinery expenses by cheque £300 Received cheque £500 from Denny Sold goods on credit to Thomas £800 10 Bought goods from Miner £3,000 11 Paid rent by cheque £120 12 Paid wage by cheque £150 13 Paid cheque for insurance £200 14 Paid cheque for telephone expense £240 15 Cheque received from Thomas £800 16 Pay Miner £3,000 17 Cash sales £5,500 18 Borrowed from bank £ 5,080 19 Cheque sent: Winston £500, Ann £300 20 Cashed a cheque for cash £650 21 Banked excess cash SHARE CAPITAL Bal c/d 25,000 BANK (1) Bank 25,000 Bal b/d 25,000 (1) Capital 25,000 (8) Denny 500 (13) Thomas 800 (21) Cash (*) 11,680 (2) Building 12,000 (3) Motor van 10,000 (7) Machine ex 300 (11) Rent 120 (12) Wage 150 (13) Insurance 200 (14) Telephone 240 (16) Miner 3000 (19) Winston 5000 Ann (20) Cash Bal c/d Bal b/d LAND & BUILDING (2) Bank Bal b/d 12,000 Bal c/d 12,000 12,000 640 650 6,020 37,980 MOTOR VAN (3) Bank 10,000 Bal b/d 10,000 LOAN Bal c/d 37,980 6,020 300 Bal c/d 10,000 PURCHASES (16) Cash 640 Bal b/d 640 (6) Winston 8,000 (10) Miner 3,000 (20b) COGS 11,500 (4) Ann 500 11,500 11,500 TRADE PAYABLES (Winston) INSURANCE (17) Bank 5000 Bal c/d 3000 (6) Purchases 8,000 Bal b/d (5) Bank 8,000 8,000 200 Bal c/d 200 Bal b/d 200 200 200 MACHINE EXPENSE (4) Bank Bal b/d 50 Bal c/d 50 50 CASH SALES (5) Sales 5,800 (10) Rent 120 (18) Bank 650 (11) Wage 150 (15) Sales 5,500 (19) Bank (*) 11,950 11,950 11,680 (5) Sales 5,800 (9) Thomas 800 (8) Cash 650 (15) Cash 5,500 12,750 Bal c/d 12,750 Bal b/d 12,750 12,750 TRADE PAYABLES (Miner) TRADE RECEIVABLES (Thomas) (9) Sales 800 (13) Bank 800 800 Bal b/d (15) Cash 3000 Bal c/d 3000 800 800 WAGES (9) Cash 150 Bal b/d 150 INVENTORY Bal b/d Bal c/d 150 (22a) COGS 5,000 150 COST OF GOODS SOLD TRADE PAYABLES (Ann) (17) Bank 300 Bal c/d 200 (22b) Purchases 11,500 (4) Purchases 500 TELEPHONE EXPENSE (4) Bank 240 (22a) Inventory 500 500 PROFIT & LOSS ACCOUNT 2,740 TRIAL BALANCE COMPANY Sozi Ltd at 31, March, 2020 Bal b/d 240 * Note 1: 5,800 + 650 + 5,500 - 120 – 150 = 11,680 £ £ Share Capital 25,000 6,020 Bank Machine expenses 300 Insurance 200 Land & building 12,000 Motor van 10,000 Wages 150 Telephone expense 240 Loan 640 Purchases 11,500 Sales Trade payables: 12,750 Winston Ann Trade receivables: Thomas Denny TOTAL 300 200 800 500 41,590 Notes Closing Inventories were valued at £ 2,740 Cost of land is £ 2,000 The building is to be depreciated at 20 % of the cost 41,590 Motor van is to depreciate at 20% of CA Insurance needs to be prepayment £30 5, Telephone has to be accrued £ 100 During the 12 months to 31, Mar 2020 the bad debts written-off amounted to £165 The income tax rate for 12 months is £840 In Mar 2020 net revalue of the land & building, are £ 15,000 Required Calculate adjustments to above (showing workings) Create an extended trial balance (ETB) to incorporate the adjustments above Transfer the ETB balances to the financial statements, by drawing up an Income Statement and a Statement of Financial Position in the vertical format Workings for Adjustments: Closing inventory: £ 2,740 Depreciation expense – Land & Building for year ended 31, Mar 2018: = £ (12,000 – 2000) x20% = £ 2000 Depreciation expense – Motor van = £ 10,000 x 20% = £2,000 Prepayment = £ 30 Accruals = £ 100 Irrecoverable debts = £ 165 Income tax = £ 840 New asset value = £ 15,000 CA = (£ 10,000 – £ 2000) = £ 8,000 → Amount of revaluation = £ 7,000 The asset will be revalued by £ 7,000 to £15,000 Journals for adjustments in ETB £ Dr Inventory Asset (SOFP) 2,740 Cr COGS (IS) Dr COGS Cr Purchases 2,740 11,500 11,500 Dr Depreciation charge – Land & Building (IS) 2,000 Cr Accumulated depreciation – Land & Building Dr Depreciation charge – Motor van (IS) 2,000 2,000 Cr Accumulated depreciation – Motor van Dr Prepayments 2,000 200 Cr Insurance Dr Telephone 200 100 Cr Accruals Dr Irrecoverable debts Cr Trade receivables £ 100 165 165 Dr tax expense 240 Cr Tax payable 240 Dr Land & Building 5,000 Dr Acc depreciation (Land & Building) Cr Revaluation surplus (part of Capital) 2,000 7,000 EXTENDED TRIAL BALANCE (WORKSHEET) As at 31, March 2020 UNADJUSTED TRIAL BALANCE DR Share Capital CR ADJUSTMENTS DR CR ADJUSTED TRIAL BALANCE DR £ 25,000 £25,000 Capital reserve (8) 7,000 7,000 6,020 6,020 Machine expenses 300 300 Insurance 200 Bank Land & Building (5) 30 (9) 2,000 12,000 Acc’ Depreciation – Land & Building Vehicles (9) 2,000 (2)2,000 10,000 Acc’ Depreciation – Motor van (3) 2,000 2,000 150 150 Loan 640 640 Purchases 11,500 11,500 Sales Trade payables 170 14,000 5,000 Wages : Winston Ann Trade receivable: Thomas Denny 800 500 CR 12,750 12,750 3000 200 3,200 (6) 165 1,135 Depreciation expense – Land & (2) 2,000 2,000 Depreciation expense – Motor van (3) 2,000 2,000 Building Accruals (4) 100 Prepayments (5) 200 Closing inventory (IS) 200 (1) 2,740 Inventory asset (SOFP) Irrecoverable debts 2,740 (1) 2,740 2,740 (6) 165 165 Tax payable TOTAL 100 (7) 240 41,590 41,590 14,275 14,275 240 51,070 51,070 STATEMENT OF PROFIT OR LOSS for the year ended 31 December, 2020 £ £ Sales 12,750 Less: Cost of goods sold Opening inventory Purchases Closing inventory 13,500 2,740 GROSS PROFIT 10,760 1,990 Less: Operating expenses Machine expenses 340 Insurance 145 Wages 600 Rent 120 Telephone 240 Depreciation expense – Land & Building 2,000 Depreciation expense – Motor van 2,000 Bad debts 165 Tax expense 240 NET PROFIT 5,850 (3860) STATEMENT OF FINANCIAL POSITION As at 31, December, 2020 Statement of financial position £ £ ASSETS Non-current assets Land & Building Accumulated Depreciation - Land & Building 12,000 2,000 Motor van 10,000 Accumulated Depreciation – Motor van (2,000) 10,000 8,000 18,000 Current Assets Inventory Accounts Receivable Less: Allowance for doubtful debts 2,740 1,135 (0) Prepayment 1,135 200 Bank 6,020 7,355 Total assets 25,355 CAPITAL & LIABILITIES Capital At start of period (Share capital) Revaluation Surplus Loss 25,000 7,000 (3860) 28,140 Non-current liabilities Loan 640 Current liabilities Accounts payable Accruals Total capital & liabilities 3,200 100 3,300 32,080 ... net revalue of the land & building, are £ 15,000 Required Calculate adjustments to above (showing workings) Create an extended trial balance (ETB) to incorporate the adjustments above Transfer the... by drawing up an Income Statement and a Statement of Financial Position in the vertical format Workings for Adjustments: Closing inventory: £ 2,740 Depreciation expense – Land & Building for... (Land & Building) Cr Revaluation surplus (part of Capital) 2,000 7,000 EXTENDED TRIAL BALANCE (WORKSHEET) As at 31, March 2020 UNADJUSTED TRIAL BALANCE DR Share Capital CR ADJUSTMENTS DR CR ADJUSTED