13 FINAL ACCOUNTS


Question 6 The following Trial Balance was extracted from the books of Patricia Guinan on 31/12/2012:


€


Buildings (cost €850,000) Delivery Vans (cost €120,000) 10% Investments 01/06/2012


Patents (incorporating 5 months’ Investment Income)


6% Fixed Mortgage (including increase of €100,000 received on 01/04/2012) Debtors and Creditors Purchases and Sales Stock 01/01/2012 Commission


Salaries and General Expenses (including Suspense) Provision for Bad Debts Discount (Net) Rent


Mortgage Interest paid for first 3 months Insurance VAT PRSI Bank


Drawings Capital


800,000 80,000


120,000 60,000


70,000


400,000 40,000 10,000


190,000


3,500 2,900


10,000


2,000 7,000


4,300 2,500


60,800 15,000 750,000 1,794,000 1,794,000


The following information and instructions are to be taken into account: (i) Stock on 31/12/2012 at cost was €60,500. No record had been made in the books for goods in transit on 31/12/2012. The invoice for these goods had been received showing the recommended retail selling price of €6,000 which is cost plus 25%.


(ii) Patents, which incorporate 5 months’ investment income, are to be written off over an 8-year period, commencing in 2012.


13


(iii) Provision for bad debts to be adjusted to 3% of debtors. (iv) Provision is to be made for mortgage interest due. (v) The suspense figure arises as a result of the posting of an incorrect figure for mortgage interest to the mortgage interest account and discount received €900 entered only in the creditors account. The correct interest was entered in the bank account.


(vi) Provide for depreciation on vans at the annual rate of 12% of cost from the date of purchase to the date of sale. Note: On 30/04/2012 a delivery van which cost €25,000 on 30/04/2008 was traded in against a new van which cost €40,000. An allowance of €5,000 was made on the old van. The cheque for the net amount of this transaction was entered in the bank account but was incorrectly treated as a purchase of trading stock.These were the only entries made in the books in respect of this transaction.


(vii) A new store was purchased during the year for €200,000 plus 12% VAT. The amount paid was debited to the buildings account. No entry was made in the VAT account.


(viii) Provide for depreciation on buildings at the rate of 3% of cost per annum. Buildings were revalued to €1,150,000 on 31/12/2012.


You are required to prepare a: (a) Trading and Profit and Loss Account for the year ended 31/12/2012. (b) Balance Sheet as at 31/12/2012.


Create a Revaluation Reserve Account.


200,000 60,000


700,000 €


192


TIP


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