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    Btap 3

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    Btap 3

    Uploaded by

    p7q27hht77
    13 views5 pages

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    btap 3

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    13 views5 pages

    Btap 3

    Uploaded by

    p7q27hht77

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 5

    >¥APP

    Answers
    Question 1:

    DONALD BROWN
    STATEMENT OF PROFIT OR
    LOSS

    Revenue
    983,240
    Cost of sales
    - Opening inventory 36,920
    - Purchases 775,872
    812,792
    - Closing inventory 39,852
    772,940
    Gross profit 210,300
    Other income — discounts received 2,350
    212,650
    Expenses

    - Lighting and heating 12,368


    - Motor expenses (5,724 + 436) 6,160
    - Rent (17,682 — 1,360) 16,322
    - General expenses 14,826
    - Depreciation (W) 26,292
    Profit for the 75,968
    year 36 682

    Working: Depreciation charge

    Total depreciation charge = depreciation charge for motor vehicles + depreciation charge for
    fixtures and fittings

    Depreciation charge for motor vehicles: $91,460 x 20% = $18,292

    292
    >¥APP
    Depreciation charge for fixtures and fittings: 10% • $(84,400 — 4,400) = $8,000

    292
    >¥APP
    The following information as at 31 December is also available.
    a. $436 is owing for motor expenses
    b. $1,360 has been prepaid for rent
    c. Depreciation is to be charged for the year as follows:
    • Motor vehicles: 20% on cost
    • Fixtures and fittings: 10% reducing balance method
    d. Inventory at the close of business was valued at $39,852
    Required:
    (1) Prepare Donald Brown's statement of comprehensive income for the year ended 31
    December 20X0
    (2) Which of the following formulas correctly describes the figure to be entered as capital
    in Donald Brown's statement of financial position?
    A. Balance b/f + gross profit for the year — drawings
    B. Balance b/f — gross profit for the year + drawings
    C. Balance b/f + profit for the year — drawings
    D. Balance b/f — profit for the year + drawingss
    (3) What is the net effect on profit of the adjustments in notes (a) to (c) above?

    291
    >¥APP
    Total: $8,000 + $18,292 = $26,292
    Question 2: C
    The correct Solution is: Balance b/f + profit for the year — drawings
    Question 3:
    The effects are as follows.
    (i) Motor expenses accrual: $436 additional expense, so reduction in profit
    (ii) Rent prepayment: $1,360 reduction in expense, so increase in profit
    (iii) Depreciation: total charge $26,292 (18,292 + 8,000) additional expense, so reduction in profit
    Total effect on profit for the year = + 1,360 —436 —26,292
    = 25,368 reduce in profit

    293
    >¥APP
    PRACTICE
    Questions

    Question 1: (Advanced)

    Donald Brown, a sole trader, extracted the following trial balance on 31 December 20X0.

    TRIAL BALANCE AS AT 31 DECEMBER 20X0


    Dr Cr

    Capital as at 1 January 20X0 52,188


    Receivables 85,474
    Cash in hand 2,822
    Payables 70,808
    Fixtures and fittings at cost 84,400
    Discounts received 2,350
    Inventory as at 1 January 20X0 36,920
    Sales 983,240
    Purchases 775,872
    Motor vehicles at cost 91,460
    Lighting and heating 12,368
    MOtor eXpenses 5,724
    Rent 17,682
    General expenses 14,826
    Bank overdraft 37,114
    Accumulated depreciation
    Fixtures and fittings 4,400
    Motor vehicles 30,584
    Drawings 53,136
    }_,180,684 1180 684

    290

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