Leaving Cert Accounting FINAL ACCOUNTS - Sole Trader: Sole Trader – Final Accounts

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Question

Sole Trader – Final Accounts

The following trial balance was extracted from the books of M. Mullen on 31/12/2016:

Delivery vans (cost €150,000) €85,000
Buildings (cost €680,000) €180,000
Office equipment (cost €25,000) €15,000
Patent (incorporating four months investment income) €30,000
3% Investments (01/05/2016) €200,000
6% Fixed mortgage €180,000
Debtors and creditors
Stock 01/01/2016 €66,000
Purchases and sales €536,500 €720,000
Commission €16,500
Provision for bad debts €3,200
Discount (net) €2,400
Bank €70,300
Salaries and general expenses €145,500
Rent €14,500
Mortgage interest paid for the first three months €2,400
Insurance (including suspense) €15,000

VAT
PAYE, PRSI and USC €21,600
Drawings €60,000
Capital €1,850,500 €1,850,500

The following information and instructions are to be taken into account:

(i) Stock on 31/12/2016 at cost €76,500. This figure includes €4,500 and now has a net realizable value of €3,000.

(ii) Provide for depreciation on delivery vans at the annual rate of 15% of cost from date of purchase to date of sale.

NOTE: On 31/3/2016 a delivery van which cost €40,000 on 30/09/2012 was traded in against a new van that cost €48,000. An allowance of €18,000 was given on the old van. The charge for the net amount of this transaction was entered in the bank account but was incorrectly treated as a disposal of trading stock. These were the only entries made in the books in respect of this transaction.

(iii) The suspense figure arises as a result of the incorrect interest or mortgage interest (although the correct figure had been entered in the bank account) and a VAT refund of €2,000 entered only in the bank account.

(iv) Patent, which incorporates 4 months investment income, is to be written off over a five year period commencing in 2016.

(v) Provision to be made for both investment income due and mortgage interest due.

(vi) A creditor which was owed €7,600 expired on 31/12/2016 with a book value of €6,500 in respect of debt. The office equipment cost £19,000. No entry was made in respect of this transaction, which refers to the equipment held on 31/12/2016.

(vii) Revenue for the building has been received on 31/12/2016 in respect of a debt of €1,200, which should have accrued. The debtor wishes to trade with Mullen and has agreed to settle this amount within 1 month.

(viii) No records had been made in the books for 'goods in transit' on 31/12/2016. The invoice for goods that Mullen for own use during the year were not recorded. These goods had a cost price of €4,800 which is cost plus 20%.

(a) Prepare a trading and profit and loss account for the year ended 31/12/2016.
(b) Prepare a balance sheet as at 31/12/2016.

Sole Trader – Final Accounts The following trial balance was extracted from the books of M - Leaving Cert Accounting - Question 1 - 2017

Worked Solution & Example Answer:Sole Trader – Final Accounts The following trial balance was extracted from the books of M - Leaving Cert Accounting - Question 1 - 2017

Prepare a balance sheet as at 31/12/2016.

Balance Sheet of M. Mullen as at 31/12/2016

Intangible Fixed Assets

Tangible Fixed Assets

Financial Assets

Current Assets

Total Assets

Current Liabilities

Total Liabilities

Capital and Reserves

Total Liabilities and Capital

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