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Incomplete Records – Control Accounts Brian O’Dowd did not keep a full set of books during the year ended 31/12/2011 - Leaving Cert Accounting - Question 6 - 2012
Question 6
Incomplete Records – Control Accounts Brian O’Dowd did not keep a full set of books during the year ended 31/12/2011. The following is a summary of the cash account... show full transcript
Worked Solution & Example Answer:Incomplete Records – Control Accounts Brian O’Dowd did not keep a full set of books during the year ended 31/12/2011 - Leaving Cert Accounting - Question 6 - 2012
Step 1
Calculate Brian O’Dowd’s Capital on 01/01/2011
Answer
To determine Brian O'Dowd's capital as of January 1, 2011, we need to calculate the total assets and subtract the total liabilities.
Assets:
- Premises: €295,000
- Delivery Vans: €72,000
- Debtors: €15,400
- Cash: €38,400
Total Assets = €295,000 + €72,000 + €15,400 + €38,400 = €420,800
Liabilities:
- Creditors: €8,300
- Expenses due: €2,130
Total Liabilities = €8,300 + €2,130 = €10,430
Capital Calculation: Capital = Total Assets - Total Liabilities = €420,800 - €10,430 = €410,370
Step 2
Calculate Brian O’Dowd’s Total Sales and Total Purchases using Control Accounts
Answer
To find the total sales and total purchases using control accounts, we will prepare the Debtors and Creditors Control Accounts.
Debtors Control Account:
- Balance b/d: €15,400
- Credit Sales: €88,100
- Cash Sales: €174,100
Total Sales = Credit Sales + Cash Sales = €88,100 + €174,100 = €262,200
Creditors Control Account:
- Balance c/d: €8,300
- Purchases: €57,800
Total Purchases = Purchases + Balance b/d = €57,800 + €125,700 = €183,500
Step 3
Prepare a Trading, Profit and Loss Account for the year ended 31/12/2011
Answer
The Trading, Profit, and Loss Account for Brian O'Dowd for the year ended 31/12/2011 is as follows:
Trading Account:
- Sales: €262,200
- Less: Cost of Sales
- Opening Stock: €14,200
- Purchases: €183,500
- Closing Stock: €12,600
Cost of Sales = Opening Stock + Purchases - Closing Stock = €14,200 + €183,500 - €12,600 = €185,100
Gross Profit = Sales - Cost of Sales = €262,200 - €185,100 = €77,100
Profit and Loss Account:
- Gross Profit: €77,100
- Less: Expenses
- General Expenses: €47,360
- Depreciation on Delivery Vans: €14,400
Net Profit = Gross Profit - Total Expenses = €77,100 - (€47,360 + €14,400) = €15,340
Add: Commission Received: €5,700
Total Net Profit: €21,040
Step 4
Prepare a Balance Sheet as at 31/12/2011
Answer
The Balance Sheet for Brian O'Dowd as at 31/12/2011 is constructed as follows:
Assets
- Fixed Assets:
- Premises: €295,000
- Delivery Vans: €57,600 (after depreciation)
- Furniture: €16,500
Total Fixed Assets = €295,000 + €57,600 + €16,500 = €369,100
- Current Assets:
- Closing Stock: €12,600
- Debtors: €19,200
Total Current Assets = €12,600 + €19,200 = €31,800
Total Assets = Fixed Assets + Current Assets = €369,100 + €31,800 = €400,900
Liabilities
- Current Liabilities:
- Creditors: €10,800
- Expenses due: €890
Total Liabilities = €10,800 + €890 = €11,690
Capital
- Capital as at 01/01/2011: €424,570
- Add Net Profit: €21,040
- Less Drawings: €16,500
Capital at 31/12/2011 = €424,570 + €21,040 - €16,500 = €429,110
Balance Sheet Summary:
Total Assets: €400,900, Total Liabilities: €11,690, Capital: €429,110