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Sole Trader Sum

Franco, a sole trader, has provided financial information as of January 31, 2014, including assets, liabilities, and expenses. The document outlines the preparation of an income statement and a statement of financial position, detailing revenue, costs, and depreciation policies. Additional notes include inventory valuation, provisions for doubtful debts, and recent purchases affecting the financial statements.

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Viha Vora
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141 views6 pages

Sole Trader Sum

Franco, a sole trader, has provided financial information as of January 31, 2014, including assets, liabilities, and expenses. The document outlines the preparation of an income statement and a statement of financial position, detailing revenue, costs, and depreciation policies. Additional notes include inventory valuation, provisions for doubtful debts, and recent purchases affecting the financial statements.

Uploaded by

Viha Vora
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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16

5 Franco is in business as a sole trader. The following balances were extracted from his books on 31
January 2014.

$
Land and buildings (cost) 150 000
Fixtures and fittings (cost) 30 000

F
Computer equipment (cost) 70 000
Provisions for depreciation: I
Land and buildings 20 000
Fixtures and fittings 13 500
Computer equipment 34 000
Int onBankloanDisposal account 500 Cr
I
8% Bank loan (repayable 30 April 2020) 100 000
Bank 17 430 Dr
Trade receivables 45 000
Trade payables 37 650
Provision for doubtful debts 1 400
Revenue 362 500
Purchases 172 400
Returns inwards 7 200
Returns outwards 8 800
Inventory at 1 February 2013 17 970
Distribution expenses 16 300
Insurance 5 900
Light and heat 7 850
Wages and salaries 69 500
Marketing expenses 31 000
General expenses 9 200
Commission received 11 400
Drawings 20 000
Capital 80 000

Additional information at 31 January 2014

1 Inventory was valued at $15 600.

2 Wages and salaries includes $15 000 drawings by Franco. gt_ds


515
3 Marketing expenses, $6750, were prepaid.
Tom
4 No interest had been paid on the bank loan.
Markeyexps
5 Computer equipment costing $8000 was purchased by cheque on 25 January 2014.
No entries had been made in the books.

6 Depreciation policy is as follows:

(i) The buildings are depreciated at the rate of 2% per annum using the straight line

co
method. Land and buildings consists of land, cost $50 000, and buildings, cost
$100 000. No depreciation is charged on the land.
(ii) Fixtures and fittings at the rate of 15% per annum using the straight line method.
(iii) Computer equipment at the rate of 25% per annum using the diminishing (reducing)
balance method.

a
75
© UCLES 2014
0
34050 36000
7110/22/M/J/14
28 9000
8000
17
Is
7
I
Trade receivables, $3000, were considered irrecoverable. A provision for doubtful debts
of 5% is to be maintained.

REQUIRED

(a) Prepare the income statement for the year ended 31 January 2014.

Franco
Income Statement for the year ended 31 January 2014

...................................................................................................................................................

Revenue 362500
...................................................................................................................................................

Returns 7200 355300


...................................................................................................................................................

...................................................................................................................................................

Infffy feb 2013 17970


...................................................................................................................................................

Purchases 172400
...................................................................................................................................................

Returns 88002181970
...................................................................................................................................................

1
Closing Inventory 50 0
7
...................................................................................................................................................

Gross Refit
...................................................................................................................................................

Add OtherIncomes
...................................................................................................................................................

Commission Recent 11400


...................................................................................................................................................

Profit on Disposal 500


1970
...................................................................................................................................................

...................................................................................................................................................

Less Expenses
...................................................................................................................................................

Distribution 16300
...................................................................................................................................................
Expense
Insurance 5900
...................................................................................................................................................

light heat 7850


...................................................................................................................................................

Salaries 69500
...................................................................................................................................................
wages
DrawingsofFranco 1500 0 54500
...................................................................................................................................................

Marketing Expenses 31000


...................................................................................................................................................

Prepaid 67 50 24250
...................................................................................................................................................

Arreed Expenses 9200


...................................................................................................................................................

Reserve doubtfuldebts 700


...................................................................................................................................................
for
© UCLES 2014 7110/22/M/J/14 [Turn over
18

...................................................................................................................................................

Bad debts 3000


...................................................................................................................................................

Depreciation on
...................................................................................................................................................

2000
Buildings 10000002 1
...................................................................................................................................................

fixtures 3000060151 4500


...................................................................................................................................................

ComputerEquipment 1
...................................................................................................................................................

Operating Expense
121
...................................................................................................................................................

Operating Refit
...................................................................................................................................................

Intonloan
89
...................................................................................................................................................

ProfitforthYear
...................................................................................................................................................

...................................................................................................................................................

I
...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

.............................................................................................................................................[24]
© UCLES 2014 7110/22/M/J/14
19

(b) Prepare the statement of financial position at 31 January 2014.

Franco
Statement of Financial Position at 31 January 2014

Non Current Assets Cost AD NBV


...................................................................................................................................................

Land Buildings 150000 22000 128000


...................................................................................................................................................

Fixtures fittings 30,000 18000 12000


...................................................................................................................................................

Computer Equipment 78000 45000 33000


...................................................................................................................................................

258001 85000 173000


...................................................................................................................................................

...................................................................................................................................................

YE.EE 15600
...................................................................................................................................................

Trade Revabls 45000 3000 2100 39900


...................................................................................................................................................

Bank 17430 8000 9430


...................................................................................................................................................

other Recembls 6750


...................................................................................................................................................

ToldAssets 271
...................................................................................................................................................

...................................................................................................................................................

e
qq.at
...................................................................................................................................................

80000
...................................................................................................................................................

c Drawings 20000 15000 3 5000


...................................................................................................................................................

Profit theYear 54030 99030


...................................................................................................................................................
for
fissendent
...................................................................................................................................................

100000
...................................................................................................................................................

...................................................................................................................................................

Eyesight Intonloan 37650


...................................................................................................................................................

other Payables 8001


...................................................................................................................................................

Totalliabilities Effge
...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................
© UCLES 2014 7110/22/M/J/14 [Turn over
I
20

...................................................................................................................................................

Revenue 565000
...................................................................................................................................................

7 Returns 4 50 560580
...................................................................................................................................................

...................................................................................................................................................

offanty 6900
...................................................................................................................................................

Purchases 124000
...................................................................................................................................................

Returns 9001 123100


...................................................................................................................................................

Carrige 1200
...................................................................................................................................................

Closing
Inty 5
...................................................................................................................................................
2150011
Grossprint
...................................................................................................................................................

Comissie Revable
...................................................................................................................................................

2700
495
...................................................................................................................................................

12,10...................................................................................................................................................

...................................................................................................................................................

Mainture Exps 17000


...................................................................................................................................................

Pelty CohEaps 500


...................................................................................................................................................

wages 32000
...................................................................................................................................................

Debts 200
Provisiperpattful
...................................................................................................................................................

Carry Outwards 19000


...................................................................................................................................................

I
...................................................................................................................................................

1000
oksday
...................................................................................................................................................

3600 73301
...................................................................................................................................................
Dep
.............................................................................................................................................[16]

[Total: 40]

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.

© UCLES 2014 7110/22/M/J/14


1 361900

IIIIS

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