QUESTION 1

The following trial balance was extracted from the book of J Abdulai at the close of
business on 28 February 2007.

Dr Cr
Le Le
Purchases and sales 92,800 157,165
Discounts 820 160
Van running cost 615
Allowance for doubtful debts 1 March 2006 405
Cash at bank 4,100
Cash in hand 324
Capital account 1 March 2006 11,400
Drawings 17,100
Account receivable and account payable 12,316 5,245
Bad debts written off 730
Office furniture 2,900
Delivery van 3,750
Rent 3,400
Inventory 1 March 2006 4,120
Wages and salaries 31,400
174,375 174,375

Notes:
(a) Inventory 28 February 2007 Le2,400.
(b) Wages and salaries accrued at 28 February 2007 Le340.
(c) Rent prepaid at 28 February 2007 Le230.
(d) Van running costs owing at 28 February 2007 Le72.
(e) Increase the allowance for doubtful debts by Le91.
(f) Provide for depreciation as follows: office furniture Le380; Delivery van Le1,250.

Required:
Draw up the income statement for the year ending 28 February 2007 together
with a balance sheet as at 28 February 2007.
QUESTION 2

The trial balance for a small business at 31 August 2008 is as follows:

Dr Cr
Le Le
Drawings 11,000
Inventory 1 September 2007 8,200
Purchases and Sales 26,000 40,900
Rent 4,400
Bank 1,500
Capital at 1 September 2007 19,700
Business rates 1,600
Provision for depreciation on motor vehicle 1,200
Sundry expenses 340
Account receivable and account payable 1,160 2,100
Motor vehicle at cost 9,000
63,900 63,900

At 31 August 2008 there was:

i. Accrued rent of Le400
ii. Inventory valued at cost prices Le9,100
iii. Prepaid business rates of Le300
iv. The motor vehicle is to be depreciated at 20% of cost
Required:
(a). The adjustments to the ledger account for rent and business rates for the year to
31 August 2008.
(b). An income statement for the year ending 31 August 2008, together with a
balance sheet as at the date.
QUESTION 3

M Kaikai, a sole trader, extracted the following trial balance from his books at the close of
business on 31 March 2009.

Dr Cr
Le Le
Cash 140
Purchases and Sales 61,000 127,245
Wages and salaries 39,200
Inventory 1 April 2008 7,940
Accounts receivable and accounts payable 12,418 11,400
Capital 1 April 2008 25,200
Bank overdraft 2,490
Fixtures and fittings 1,900
Discounts 2,480 62
Allowance for doubtful debts 630
Rent and insurance 8,870
Return inwards 3,486
Return outwards 1,356
Carriage outwards 3,210
Van 5,600
General office expenses 319
Drawings 21,400
Wages and salaries 39,200
168,383 168,383

Notes:
(a) Inventory 31 March 2009 Le6,805.
(b) Increase the allowance for doubtful debts by Le110 to Le470.
(c) Provide for depreciation as follows: Fixtures and fittings Le190; van Le1,400.
(d) Wages and salaries accrued at 31 March 2009 Le3,500; Office expenses owing Le16.
(e) Rent prepaid 31 March 2009 Le600.

Required:
Prepare the income statement for the year ending 31 March 2009 together with a balance
sheet as at date.
QUESTION 4

From the following trial balance of Fanta Sei, store owner, prepare an income statement for
the year ending 31 December 2007, and a balance sheet as at that date, taking into
consideration the adjustment shown below:
Trial balance as at 31 December 2007

Dr Cr
Le Le
Sales 400,000
Purchases 350,000
Rates 6,000
Capital 179,000
Sales returns 5,000
Telephone 1,000
Bank balance 3,000
Purchases returns 6,200
Accounts receivable and accounts payable 9,800 7,000
Opening inventory at 1 January 2007 100,000
Wages and salaries 30,000
Bad debts 200
Allowance for doubtful debts 800
Shop fittings at cost 40,000
Van at cost 30,000
Drawings 18,000
593,000 593,000

(a). Closing inventory at 31 December 2007 Le120,000.

(b). Accrued wages Le5,000.
(c). Telephone account outstanding Le220.
(d). Rates prepaid Le500.
(e). Depreciate shop fittings at 10 percent per annum, and van at 20 percent per
annum, on cost.
(f). The allowance for doubtful debts to be increased to 10 percent of accounts
receivable.
 QUESTION 5
Mr. Obai has been trading for some years as wine merchant. The following list of balances
has been extracted from his ledger as at 30 April 2007, the end of his most recent financial
year.
Le
Sales 259,870
Capital 83,887
Return inwards 5,624
Trade accounts payable 19,840
Drawings 18,440
Returns out 13,407
Carriage inwards 11,830
Allowance for doubtful debts 512
Bad debts 2,008
Discount allowed 2,306
Discount received 1,750
Purchases 135,680
Cash in hand 534
Cash at bank 4,440
Carriage outwards 4,562
Inventory as at 1 May 2006 15,654
Rent, rates and insurance 25,973
Heating and lighting 11,010
Postages, stationery and telephone 2,410
Advertising 5,980
Salaries and wages 38,521
Trade accounts receivable 24,500
Fixtures and fittings – at cost 120,740
Depreciation 12,074
Provision for depreciation on fixtures and fittings – as at 30/04/2007 63,020
The following additional information as at 30 April 2007 is available:
(i). Heating and lighting is accrued by Le1,360.
(ii). Inventory at the close of business was valued at Le17,750.
(iii). Rates have been prepaid by Le5,435.
(iv). Insurance have been prepaid by Le1,120.
(v). The allowance for doubtful debts is to be adjusted so that it is 3% of trade
accounts receivable.
Required:
Prepare Mr. Obai’s income statement for the year ending 30 April 2007 and a balance sheet
as at that date.
QUESTION 6
The following information relates to MNT LIMITED, a sole trader for the year ended 31st
December 2018:
Le
Sales 355,000
Sales returns 5,000
Purchases 252,000
Returns outwards 2,000
Carriage outwards 1,000
Carriage inwards 5,000
Opening Stock 40,000
Direct expenses 5,000
Capital ?
Furniture 5,000
Bank overdraft 10,000
Buildings 45,000
Plant and Machinery 40,000
Sundry Creditors 25,000
Bills Payable 30,000
Sundry Debtors 30,000
Rent received 3,000
Discount Received 3,000
Discount Allowed 2,000
Commission Allowed 1,000
Taxes and Insurance 3,000
Provision for doubtful debt 2,000
Bad debt 1,500
Salaries 20,000
Dividend Paid 5,000
General Expenses 5,000
Rent paid 3,000
Bills receivable 21,500
Additional Information:
(1) Stock at the end Le42,000
(2) Depreciation made on:
Plant and Machinery Le2,000
Buildings Le1,000
(3) Provision for Doubtful Debts at 5% on Sundry Debtors.
(4) Outstanding Rent Le1,000
(5) Prepaid Salaries Le1,000
(6) Interest on Capital at 5%.

Required:
(a) Prepare a horizontal Trial balance, clearly stating the figure for CAPITAL.
(b) Prepare an Income statement for the ended 31st December 2018, and a statement of
financial position as at that date.