Final Accounts of a Sole Trader The following balances were extracted from the books of James Phelan, a sole trader as at 31/12/2020: Delivery vans at cost €62,000 Accumulated depreciation – delivery vans €14,000 Buildings €500,000 Office equipment (cost €30,000) €12,000 Patents €28,000 Drawings €14,200 Capital 01/01/2020 €262,000 Creditors €24,400 Debtors €32,400 Sales €595,000 Purchases €196,000 Returns outward (sales returns) €8,100 Stock 01/01/2020 €32,000 Stationery €3,600 Discount received €1,600 General expenses €25,000 Wages and salaries €112,000 Advertising €6,000 Insurance €8,200 Term loan (received 01/01/2020) €90,000 Loan interest paid €1,200 Provision for bad debts €2,700 VAT €13,600 PRSI / USC €19,700 Bank €44,500 Profit and loss balance 01/01/2020 €51,350 You are given the following additional information: (i) Stock for resale on 31/12/2020 was €23,000 - Leaving Cert Accounting - Question 1 - 2021

Trading and Profit and Loss Account for the year ended 31/12/2020

Sales and Returns

Sales: €595,000 Less: Sales Returns: €8,000
Net Sales: €587,000

Cost of Sales

Opening Stock: €32,000
Purchases: €196,000
Less: Returns Outwards: €8,100
Net Purchases: €187,900
Total Cost of Sales:
$ext{Cost of Sales} = ext{Opening Stock} + ext{Net Purchases} - ext{Closing Stock}$
$ext{Cost of Sales} = €32,000 + €187,900 - €23,000 = €196,900$

Gross Profit:
$ext{Gross Profit} = ext{Net Sales} - ext{Cost of Sales}$
$ext{Gross Profit} = €587,000 - €196,900 = €390,100$

Less Expenses

• Wages and Salaries: €112,000
• General Expenses: €25,000
• Stationery: €2,100
• Insurance: (Adjusted for year) €8,200
• Advertising: €6,000
• Depreciation on Buildings: €10,000
• Depreciation on Office Equipment: €2,400
• Depreciation on Delivery Vans: €4,880

Total Expenses: €170,480

Operating Profit

Operating Profit:
$ext{Operating Profit} = ext{Gross Profit} - ext{Total Expenses}$
$ext{Operating Profit} = €390,100 - €170,480 = €219,620$

Interest and Gains

• Discount Received: €1,600
• Interest on Loan: (7% of €90,000) €6,300

Net Profit:
$ext{Net Profit} = ext{Operating Profit} + ext{Discount Received} - ext{Interest}$
$ext{Net Profit} = €219,620 + €1,600 - €6,300 = €214,920$

Add: Profit and loss balance 01/01/2020: €51,350
Total Profit:
$€214,920 + €51,350 = €266,270$