CHAPTER 13
Sample Question Sole Trader Final Accounts 120 Mark Question The following Trial Balance was extracted from the books of Fiona Behan on 31/12/2012: €
€
Buildings (Cost €600,000) Delivery Vans (Cost €120,000) 6% Investments (01/07/2012) Patents
8% Fixed Mortgage (including increase of €80,000 received on 01/04/2012) Debtors and Creditors Purchases and Sales Stock 01/01/2012 Commission
Salaries and General Expenses (incorporating Suspense) Provision for Bad Debts Discount (Net) Rent
Mortgage Interest paid for the first three months Advertising VAT
Bank
PAYE and PRSI Drawings Capital
32,000 495,000 1,476,300 1,476,300
The following information and instructions are to be taken into account: (i) Stock on 31/12/2012 at cost was €75,000. This figure includes damaged stock which cost €9,000 but which now has a net realisable value of €4,000.
(ii) Provide for depreciation on vans at the annual rate of 10% of cost from the date of purchase to the date of sale. Note: On 31/03/2012 a van, which cost €26,000 on 31/03/2010, was traded in against a new van which cost €53,000. An allowance of €14,500 was given on the old van. The cheque for the net amount of this transaction was incorrectly treated as a purchase of trading stock. This was the only entry made in the books in respect of this transaction.
(iii) The suspense arises as a result of the incorrect figure for mortgage interest (although the correct entry had been made in the bank account) and from €500 paid towards PAYE and PRSI entered only in the bank account.
(iv) The advertising payment is towards a 12-month campaign which began on 01/10/2012. (v) Patents, which incorporate three months’ investment income received, are to be written off over a five year period commencing in 2012.
(vi) Goods with a retail selling price of €8,000 were returned to a supplier. The selling price was cost plus 20%. The supplier issued a credit note showing a restocking charge of 12% of the cost price. No entry has been made in respect of this restocking charge.
(vii) Provision is to be made for mortgage interest due. 10% of the mortgage interest for the year refers to the private section of the building.
(viii) Provide for depreciation on buildings at a rate of 3% of cost per annum. It was decided to revalue the buildings at €790,000 on 31/12/2012.
(ix) A cheque for €500 had been received on 31/12/2012 in respect of a debt of €750 previously written off as bad. The debtor has agreed to pay the remainder within one month. No entry was made in the books to record this transaction.
You are required to prepare a: (a) Trading and Profit and Loss Account for the year ended 31/12/2012. [75 Marks] (b) Balance Sheet as at 31/12/2012. [45 Marks]
13
480,000 100,000 150,000 50,000
200,000 60,000
450,000 55,000 6,000
80,000 1,500
1,200 7,500 1,700 2,900
2,000 2,100 3,700
86,000 686,000
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