Cambrige Notes: Simple Trading and Profit and Loss Account Example 2

Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes: Simple Trading and Profit and Loss Account (Income Statement) Example 2

From the following trial balance of J Nhiwatiwa after his first year’s trading, you are required to
draw up a trading and profit and loss account for the year ended 30 June 20X8. A statement of financial position is not required.

	$	$
	DR	CR
Sales		265,900
Purchases	154,870
Rent	4,200
Lighting and heating expenses	530
Salaries and wages	51,400
Insurance	2,100
Buildings	85,000
Fixtures	1,100
Debtors	31,300
Sundry expenses	412
Creditors		15,910
Cash at bank	14,590
Drawings	30,000
Vans	16,400
Motor running expenses	4,110
Capital		114,202
	396,012	396,012

Stock at 30 June 20X8 was $16,280.

Solution

J Nhiwatiwa

Trading and Profit and Loss Account for the year ended 30 June 2018

	$	$
Sales		265,900
Less Cost of Goods Sold:
Purchases	154,870
Less closing stock	(16,280)
		(138,590)
		127,310
Less expenses:
Rent	4,200
Lighting and heating expenses	530
Salaries and wages	51,400
Insurance	2,100
Sundry expenses	412
Motor running expenses	4,110
		(62,752)
		64,558