Leaving Cert Accounting FINAL ACCOUNTS - Sole Trader: The following Trial Balance was

Question

The following Trial Balance was extracted from the books of Mike McMahon on 31/12/2013:

Buildings (Cost €640,000) .................................. €
Delivery Vans (Cost €90,000) ................................ 745,000
3% Investments (01/04/2013) ............................... €200,000
6% Fixed Mortgage (including increase of €60,000 received on 01/04/2013)
........................................................................... 200,000
Patents ...................................................................... 11,000
Debtors and Creditors .............................................. 10,000
Salaries and General Expenses (incorporating suspenses)........ 9,200
Stock (30/11/2013) .................................................. 3,500
Advertising .................................................................. 1,400
Discount ..................................................................... (200)
Rent ........................................................................... 10,000
Mortgage interest paid for the first three months .................. 1,800
Insurance .................................................................. 5,750
VAT .......................................................................... 4,200
Bank ......................................................................... 16,600
PAYE, PRSI & USC ................................................... 3,800
Drawings .................................................................... 41,250
Capital ...................................................................... 1,560,800

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

1. Stock at 31/12/2013 at cost was €68,000. No record has been made for 'goods in transit' on 31/12/2013. The invoice for these goods has been received showing the recommended retail selling price of €4,800 which is cost plus 20%.

2. Provision for depreciation on vans at the annual rate of 16% of cost per annum.

3. Note: On 31/3/2013 a delivery van which cost €40,000 on 30/9/2010 was traded in for a new delivery van costing €96,000. An allowance of €20,000 was given for the trade-in and the amount of this transaction was entered in the bank account as incorrectly treated as simply a sale of stock. There was no additional cash involved in this transaction.

4. The motor expenses as a result of the incorrect figure for mortgage interest (although the correct entry had been made in the books) should not be included. It is €2,000 provided for PAYE, PRSI and USC once correctly treated.

5. The bank received a debit note of €15,000 were returned to a supplier. The selling price of the goods was €20,000. The cost price of the goods was €16,000.

6. Stock on hand at the end of the year was calculated at retail value of €10,000.

7. There is no depreciation of the buildings. The mortgage interest refers to the $(3)$ month period only up to the year-end.

8. The loan has yet to be paid with interest of 2% of cost per annum over a five-year period.

You are required to prepare a:

(a) Trading and Profit and Loss Account for the year ended 31/12/2013 (75)
(b) Balance Sheet as at 31/12/2013. (45)

Particulars	€
Sales	695,000
Less Cost of Sales
- Stock 1/1/2013	84,000
- Add Purchases	530,400
- Less Stock 31/12/2013	(68,000)
Cost of Sales	483,450
Gross Profit	211,550

Particulars	Cost	Accumulated Depreciation	Total
Intangible Fixed Assets
- Patents	40,000	7,000	32,920
Tangible Fixed Assets
- Buildings	720,000	11,450	708,550
- Delivery Vans	96,000	11,450	804,550
Financial Assets	100,000		100,000
Current Assets
- Stock	84,000		84,000
- Debtors	10,000		10,000
- Investment Income due	1,500		1,500
Creditors: amounts falling due within one year
- Creditors	110,000		110,000
- Bank	16,600		16,600
- VAT	4,200		4,200
- PAYE/PRSI	3,800		3,800
- Mortgage interest	7,800		7,800
	Financed by:
- Creditors amounts falling due after more than one year	200,000		200,000
Capital and Reserves
- Capital	30,000		30,000
- Revaluation Reserve	80,000		80,000
- Net Profit	4,345		4,345
- Drawings	(46,425)		(46,425)
Capital Employed	925,720		925,720

The following Trial Balance was extracted from the books of Mike McMahon on 31/12/2013: Buildings (Cost €640,000) ................................. - Leaving Cert Accounting - Question 1 - 2010

Worked Solution & Example Answer:The following Trial Balance was extracted from the books of Mike McMahon on 31/12/2013: Buildings (Cost €640,000) ................................. - Leaving Cert Accounting - Question 1 - 2010

Trading and Profit and Loss Account for the year ended 31/12/2013

Trading and Profit and Loss Account for the year ending 31/12/2013

Less Expenses

Selling and Distribution

Add Operating Income

Balance Sheet as at 31/12/2013

Balance Sheet as at 31/12/2013

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