ZIMSEC O Level Principles of Accounting: Single entry and Incomplete records: Example 2
- Our first example on this topic was relatively straight forward
- We will now look at a more challenging and comprehensive example
- On how to create Financial Statements in cases where only single entry and incomplete records are kept
William Sachikonye runs a second-hand furniture business from a shop which he rents. He does not keep complete accounting records, but is able to provide you with the following information about his financial position at 1 April 20X8: Stock of furniture $3,210; Trade debtors $2,643; Trade creditors $1,598; Motor vehicle $5,100; Shop fittings $4,200; Motor vehicle expenses owing $432.
He has also provided the following summary of his bank account for the year ended 31 March 20X9:
|Balance at 1 Apr 20x8||2 420||Payments of trade creditors||22 177|
|Cheques received from Trade Debtors||44 846||Electricity||1 090|
|Cash sales||3 921||Telephone||360|
|Shop fittings||2 550|
|Motor vehicle expenses||2 116|
|Balance at 31 March 20x9||1 775|
All cash and cheques received were paid into the bank account immediately.
You find that the following must also be taken into account:
- Depreciation is to be written off the motor vehicle at 20% and off the shop fittings at 10%, calculated on the book values at 1 April 20X8 plus additions during the year
- At 31 March 20X9 motor vehicle expenses owing were $291 and insurance paid in advance was $177.
- Included in the amount paid for shop fittings were:
a table bought for $300, which William resold during the year at cost,
some wooden shelving (cost $250), which Smithson used in building an extension to his house.
Other balances at 31 March 20X9 were:
- Trade Debtors $4 012
- Trade Creditors $2 445
- Stock of furniture $4 063
- For the year ended 31 March 20X9
- calculate William’s sales and purchases,
- prepare his trading and profit and loss account.
- Prepare William’s balance sheet as at 31 March 20X9.
- The first part of the solution to this question can be found here
- The second part of the solution can be found here
To access more topics go to the Principles of Accounting Notes.