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 K. Kelly on 31/12/2005.

Buildings (cost €900,000)                                €       €
Delivery Vans (cost €130,000)                         66,500     300,000
6% Investments (2,600)                                   76,500      
Parents' Investment (3,000)                         80,000
Debtors and Creditors                                          76,500      85,500
Purchases and Sales                                          65,000      980,000
Stock 1/1/2005                                               3,900
Commission                                                       12,600
Salaries and general expenses (incorporating suspension)  192,500
Provision for Bad Debts                                      3,900
Discount (net)                                                  3,600
Rent                                                              12,000
Mortgage interest paid for the first 3 months            3,000
Insurance                                                        7,800
V.A.T.                                                             4,300
P.R.S.I.                                                            2,500
Bank                                                              36,000
Drawings                                                         36,000
Capital                                                            735,000

2,187,600                                               2,187,600

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

(i) Stock at 31/12/2005 at cost was €72,500. No record had been made in the books for 'goods in transit' on 31/12/2005. The invoice for these goods had been received showing the recommended retail selling price of €7,000 which is cost plus 25%.
(ii) Provide for depreciation on vans at the annual rate of 15% of cost from the date of purchase to the date of disposal.
(iii) Note: On 30/04/2005 a delivery van which cost €35,000 on 31/10/2002 was traded in against a new van costing €60,000. The depreciation for this van should be calculated according to the restatement method.
(iv) Provide for 30% reduction in the accounts for bad debts.
(v) The mortgage interest for the last three months must also be accrued for the mortgage of over a 5 year period.
(vi) You are to include the amount for motor expenses included previously charged at €200,000 plus VAT 12.5%. The amount paid to the tax authority was entered directly on the buildings account. No entry was made for the revaluation account.
(vii) The revaluation reserve was sides at £3,000 per annum. It was decided to revalue the buildings accordingly.
(viii) Provisions for depreciation were adjusted to 3% of debtors.

You are required to prepare:

(a) Trading and Profit and Loss account, for the year ended 31/12/2005.
(b) Balance sheet as at 31/12/2005.

Sole Trader – Final Accounts The following trial balance was extracted from the books of K - Leaving Cert Accounting - Question 1 - 2006

Worked Solution & Example Answer:Sole Trader – Final Accounts The following trial balance was extracted from the books of K - Leaving Cert Accounting - Question 1 - 2006

Trading and Profit and Loss account, for the year ended 31/12/2005.

Sales Calculation

Cost of Sales

Gross Profit

Total Expenses

Net Profit Calculation

Balance Sheet as at 31/12/2005

Intangible Fixed Assets

Tangible Fixed Assets

Current Assets

Total Liabilities Calculation

Final Totals

Balance sheet as at 31/12/2005.

Balance Sheet as at 31/12/2005

Assets

Liabilities

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