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 F: PREPARING BASIC FINANCIAL STATEMENTS 

 

320

 

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) 

Wages and salaries need to be accrued by $800. 

(c) 

Other operating expenses are prepaid by $300. 

(d) 

The allowance for receivables is to be adjusted so that it is 2% of trade receivables. 

(e) 

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

(i) 

Property: 1.5% per annum using the straight line method 

(ii) 

Equipment: 25% per annum using the reducing balance method 

Required 

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

financial position as at that date. 

Tutorial note. Again, you have met a simplified form of Stephen Chee before. However, this version 

contains a lot more information for you to deal with before you can prepare the accounts. 

Solution

 

STEPHEN CHEE  

STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 MAY 20X1 

 

$      

$ 

Revenue 

 

 402,200

Cost of sales 

 

  

Opening inventory 

 50,000 

  

Purchases 

 250,000 

  

Purchases returns 

 (15,000) 

 

 285,000 

  

Closing inventory 

  42,000 

 

 

 243,000

Gross profit 

 

 159,200

Other income – discounts received 

 

     4,800

 

 

 164,000

Expenses 

 

  

Operating expenses 

 

  

Wages and salaries ($58,800 + $800) 

 59,600 

  

Irrecoverable debts (W1) 

 4,860 

  

Loan interest 

 5,100 

  

Depreciation (W2) 

 12,300 

  

Other operating expenses ($17,700 – $300) 

 17,400 

 

 

 99,260

Profit for the year 

 

   64,740

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CHAPTER 18  

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  PREPARATION OF FINANCIAL STATEMENTS FOR SOLE TRADERS