I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

PART D: RECORDING TRANSACTIONS AND EVENTS 

 

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9

   Worked example 

You have already had practice at preparing a statement of profit or loss and statement of financial 

position from a simple trial balance. Now see if you can do the same thing but at a more advanced 

level, taking account of adjustments for depreciation and inventory. Have a go at the following question. 

QUESTION 

Final accounts

 

The following list of account balances was extracted from the ledger of Roger Jones, a sole trader, as at 

31 May 20X1, the end of his financial year. 

ROGER JONES 

TRIAL BALANCE AS AT 31 MAY 20X1 

Dr 

Cr 

 

$ 

$ 

Property, at cost 

 120,000 

Equipment, at cost 

 80,000 

Accumulated depreciation (as at 1 June 20X0) 

 

  on property 

 

 20,000

  on equipment 

 

 38,000

Purchases 

 250,000 

Sales 

 

 402,200

Inventory, as at 1 June 20X0 

 50,000 

Returns out (purchase returns) 

 

 15,000

Wages and salaries 

 58,800 

Selling expenses 

 22,600 

Loan interest 

 5,100 

Other operating expenses 

 17,700 

Trade accounts payable 

 

 36,000

Trade accounts receivable 

 38,000 

Cash in hand 

 300 

Bank 

 1,300 

Drawings 

 24,000 

17% long-term loan 

 

 30,000

Capital, as at 1 June 20X0 

               

 126,600

 

 667,800 

 667,800

The following additional information as at 31 May 20X1 is available. 

(a) 

Inventory as at the close of business has been valued at cost at $42,000. 

(b) 

Depreciation for the year ended 31 May 20X1 has still to be charged as follows. 

Property: 1.5% per annum using the straight line method 

Equipment: 25% per annum using the reducing balance method 

Required 

Prepare Roger Jones's statement of profit or loss for the year ended 31 May 20X1 and his statement of 

financial position as at that date. 

BPP Tutor Toolkit Copy

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CHAPTER 8  

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  TANGIBLE NON-CURRENT ASSETS