Incomplete Records - Control Accounts R - Leaving Cert Accounting - Question 6 - 2008

To prepare the Trading and Profit and Loss Account, we consider the following:

Trading Account

Sales: €282,400
Less: Cost of Goods Sold:

• Stock at 1 January 2007: €12,300
• Add: Purchases: €145,800
• Less: Stock at 31 December 2007: €14,200

Thus: $ext{Cost of Goods Sold} = 12,300 + 145,800 - 14,200 = 143,900 €$
Gross Profit: $ext{Gross Profit} = ext{Sales} - ext{Cost of Goods Sold} = 282,400 - 143,900 = 138,500 €$

Profit and Loss Account

Add: Commission received: €4,500
Less: Expenses:

• Wages and General Expenses: €74,300
• Depreciation on Delivery Vans: €13,600

Thus: $ext{Net Profit} = ext{Gross Profit} + ext{Commission} - ext{Total Expenses}$ Where total expenses = 74,300 + 13,600 = 87,900 €

Therefore: $ext{Net Profit} = 138,500 + 4,500 - 87,900 = 55,100 €$

To prepare the Balance Sheet, we summarize the assets and liabilities:

Balance Sheet as at 31 December 2007

Fixed Assets:

• Premises: €840,000
• Delivery Vans: €54,400 (after 20% depreciation on €68,000)
• Equipment: €899,000

Total Fixed Assets: $840,000 + 54,400 + 899,000 = 1,793,400 €$

Current Assets:

• Stock: €14,200
• Trade Debtors: €9,600
• Bank: €82,100

Total Current Assets: $14,200 + 9,600 + 82,100 = 105,900 €$

Less: Current Liabilities:

• Creditors: €4,300
• Accrued Expenses: €600

Total Current Liabilities: $4,300 + 600 = 4,900 €$

Net Current Assets:

$ext{Total Current Assets} - ext{Total Current Liabilities} = 105,900 - 4,900 = 101,000 €$

Financed by:

• Capital at 1 January 2007: €928,780
• Add: Net Profit: €55,100
• Less: Drawings: €8,200

Capital Employed: $928,780 + 55,100 - 8,200 = 975,680 €$