Incomplete records - unit 5 - intermediate/advance

Alec Baker

Hi folks, I am really struggling to answer this question. Any help or thoughts would be much appreciated. Please see my attempted at the bank a/c. I am also having problems with the depreciation value for 20x1.

Philip Gold is a retailer in motorcar accessories. Despite professional advice, he does not maintain a full accounting system. He argues that if all cash transactions are dealt with through his bank account, and the bank does its job properly, then his annual accounts and particularly the profit figure for tax assessment are relatively easy to effect. You have been asked to prepare certain accounts from his bank statements and other business transactions in order to ascertain his profit performance and financial status in respect of the year ended 31 July 20x1.
The following information is obtained.
His current assets as at 31 July were:
20X0 20X1
£ £
Trading stock 42300 35600
Trade Debtors 37600 23100
Advance payments – rent 750 900
Bank Balance 11900

His current assets as at 31 July were:
20X0 20X1
£ £
Trade creditor 33900 39200
Accuruals-electricity 500 700
Bank overdraft 21000

Business transactions shown in the bank account were:
£
Wages 34000
Suppliers of accessories 251400
Rent, rates & electricity 10,100
Overheads 7,460
Interest free loan form relative 25000

- Accessories costing £6000 were withdrawn from the business by gold himself for own use
- Mark up on accessories is 40% on cost
- Shop fixtures and fittings at cost as at 31 july 20X0 were £29000 and one year later £41000. No fixed assets were sold during the year.
- Accumulative depreciation as at 31 july 20x0 was £8700. Annual depreciation expense is at a rate of 10% based on the cost of the assets at year end and still held in the business.
- The source of all cash received was from trade debtors, except for the loan from the relative, and all cash received has been banked in the business bank account, except for withdrawals of £52000 by gold.
Required:
- A summary of the business bank account for the year ended 31 july 20x1.
- A business trading and profit & loss a/c for the year ended 31 july 20x1 and balance sheet as at that date.

Bank a/c

dr

loan 25000
bank - debtor 383260


£408260

cr
b/d 21000
wages 34000
suppliers 25100
Rent,Rates,Electric 10100
overhead 7460
Drawings - assets 6000
Drawings - cash 52000
?? 14400

Balance c/d 11900

£408260

sdv

I have tried to work out this problem

I am getting a difference of £29000 in the Balance Sheet

I would be interested if someone can work this out and let me know where have I gone wrong

A challenge for you out there!

sdv

Problem Solved!

perseverence paid off

see the attached file

Alec Baker

Brilliant, thanks for your quick response. I think I will need to revisit this chapter as I seem to be way off the correct answer.

Thanks again

steveJ

Alec Baker wrote: »

Brilliant, thanks for your quick response. I think I will need to revisit this chapter as I seem to be way off the correct answer.

Thanks again

Dont worry Alec, I was really struggling with this chapter !!!
At times i really got demotivated and couldnt see a way forward. Just keep going with it. One step at a time.

How are you studying ? distance learning ?

Alec Baker

This level I am doing distance learning with (Home College), I did foundation level at college. It is hard work, especially if you are stuck on a subject. I am missing the Osbourne Accounting Books because they had more case studies then this material, only seems to do one case study and doesn't cover all eventualities which can be abit tough. Anyway rant over!