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Patel has been in a Gas cylinder retailing business for many years, and has not
maintained a set of books. Patel now wants to expand his business, by obtaining a
loan for $5.5 million. The bank has now requested Patel to submit his latest financial
statements. The following information is available for the year ended 31 December
2006.
I.
II. Gas cylinders are purchased on a quarterly basis. The business operates in
Fist in First Out (FIFO) periodic stock valuation method. Purchases of Gas
Cylinders for the four quarters of trading.
Bank summary
Receipts:
From credit sales 400000
sale of motor vehicles 90000
Payments
Salaries and Wages 20000
Creditors 200000
Rent 10000
Electricity 15000
Drawings 15000
Advertising 15000
Printing and Stationery 5000
Transportation Cost 10000
Insurance 10000
III. Gas cylinders are purchased on a quarterly basis. The business operates in
Fist in First Out (FIFO) periodic stock valuation method. Purchases of Gas
Cylinders for the four quarters of trading.
Debtors 150000
V. All sales and purchases were for credit . 500 gas cylinders had been sold for
the year 2006.
VI. On 1 January 2006, the following balances were available for the business.
Freehold premises 100000
Motor vehicles 200000
Debtors 50000
Provision for Depreciation On Motor vehicles 80000
Creditors 40000
Stock of 100 gas cylinders 10000
Bank 10000
vi. Motor vehicles are depreciated at 10% on cost. On 1 April 2006 a motor
vehicle purchased 31 December 2004 for $80000 was sold. Depreciation is
provided on the number of months the assets are owned.
Required:
Answer.
1-
Add:Income 20000
370000
less: expenses
Depreciation 14000
Salaries and
Wages 20000
Rent 10000
Electricity 15000
Adverising 17000
Printing and
Stationery 2000
Transport cost 10000
Insurance 10000 98000
NET PROFIT 272000
2-
Balance Sheet
Fixed Assets
Freehold Premises 100000 100000
Motor vehicles 120000 84000 36000
136000
Current Assets
closing stock 130000
debtors 150000
prepaid stationery 3000
bank 200000
483000
less:liabilities
creditor
s 110000
accrued
advertising 2000 112000 371000
507000
financed by:
capital 250000
add:net profit 272000
522000
less:Drawing 15000 507000