1、Incomplete RecordAfter having worked in a trading firm for many years, Mr. S.L. Hung decided to start his own trading business, investing his savings of $100 000. On 1 April 2011, he leased suitable premises at a rental of $12,000 per month. He paid a deposit of two months rent and the first months
2、rent in advance. On the same day he opened a bank account in the name of Hung Traders and made an initial deposit of $64,000.Mr Hung has been very successful in running the business but he knows very little about bookkeeping. At the end of a year of trading he is eager to know his trading position.
3、He has maintained sufficient records of cash, receivables and payables.The following information is given in respect of the transaction for the first year:(i) An analysis of the bank statements, pay-in-slips and cheque book stubs reveals the following:$amounts banked (including initial deposit) 840,
4、000payment to creditors 350,000electricity bills paid 29,000rent paid 132,000fixture purchased 88,000van purchased 24,000insurance premiun paid 2,200personal expenses 28,000cash drawn 165,000(ii) Mr Hung employed an assistant on 1st May 2011 on a monthly salary of $3,000 which was always paid in cas
5、h. Cash drawn was also used for the following:$printing and stationery 16,000cleaning and maintenance 25,420petrol and oil 18,900signboard for the shop 12,000purchases of goods for resale 47,000miscellaneous expenses 8,020(iii) Mr Hung banked all his takings with the exception of one occasion when h
6、e used $25,000 cash to pay for purchases of goods and only banked the balance.(iv) A sum of $46,900 is still owing from customers on 31 March 2012.(v) Stock-in-trade on 31 March 2012 was valued at $59,800.(vi) Mr Hung paid the electricity bill for the month of March 2012, amounting to $3,680, on 5 A
7、pril 2012.(vii) Mr Hung wants to set aside $1,000 as accountants fees.(viii) Mr Hung owes a sum of $84,900 to trade creditors on 31 March 2012 for goods purchased.(ix) Depreciation is to be provided at 20% on the cost of the van and 10% on the cost of fixtures. Mr Hung agrees that the signboard for
8、the shop should be considered as a fixture.(x) Mr Hung had taken, for his personal use, goods purchased for resale costing $2,500.Required:(a) the trading, profit and loss account of Hung Traders for the year ended 31 March 2012; and (11 marks)(b) the balance sheet as at that date. (9 marks)(a)Hung
9、TradersTrading & profit & loss account for the year ended 31March 2012$ $2 Purchases 434900(1) +25000 (0.5) +47000(0.5) 506900 Sales 847900 20.5 Less: drawings 25005044000.5 Less: closing stock 59800Cost of goods sold 444600Gross profit c/d 403300847900 8479000.5 Printing & stationery 16000 Gross pr
10、ofit b/d 4033000.5 Rent $12000 x 12 1440000.5 Cleaning & maintenance 254200.5 Petrol & oil 189000.5 Electricity 326800.5 Accountants fees 10000.5 Insurance 22000.5 Miscellaneous exp. 8020Depreciation of 0.5 Fixture (88000+12000)x10% 100000.5 Van 48000.5 Wages 330000.5 Net profit 107280403300 403300
11、(11)Note: Signboard is a “fixture” and should not be charged to the income statement. Personal expense of the owner is “drawings” and should not be charged to the income statement. Some students misunderstood the phrase “set aside”. They thought this “set aside” is to create some sort of “RESERVE”.
12、In fact, the accountant fee is just an expense not yet paid. The “set aside” means to provide for it as an accrual.(b)Hung TradersBalance sheet as at 31 March 2012MarksNon-current Assets Cost Depreciation NBV Capital Marks$ $ $ 1 Fixtures 100000 10000 90000 Capital 100000 0.51 Van 24000 4800 19200 N
13、et profit for the year 107280 0.5109200 207280Less: drawings 30500 0.5Current Assets $ 28000+2500 1767800.5 Inventory 59800 Current Liabilities0.5Trade Receivables 46900 Trade payables 84900 0.51 Rental deposit 24000 Accruals 4680 11 Bank 21800 3680+1000 895801 Cash 4660157160266360 266360 (9)Note:
14、Rental deposit $24,000 ($12,000 x2) is current asset. Accruals are composed of electricity $3,680 and accountant fee $1,000. Drawings are composed of goods $2,500 and personal expenses $28,000. Workings1.Bank account$ $Capital 64000 Creditors 350000Cash 776000 Electricity 29000Rent 132000Fixtures 88
15、000Van 24000Insurance 2200Personal expenses 28000Cash drawn 165000Balance c/d 21800840000 8400002.Cash account $ $Cash withdrawn from bank 165000 Bank 776000Debtors 801000 Cash Purchases 25000Printing & stationary 16000Cleaning & maintenance 25420Petrol & oil 18900(Signboard) - Fixture 12000Purchases of goods 47000Miscellaneous expenses 8020Wages 33000Balance c/d 4660966000 9660003.Total debtors$ $Sales 0.5 847900 Cash received(840+25-64) 1 801000Balance c/d 0.5 46900847900 847900Total creditorsBank 0.5 350000 Purchases 434900Balance c/d 0.5 84900434900 434900
