Preparing the trading, profit and loss account.And balance sheet

Question

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Here is the preparation of the Trading, Profit and Loss Account, and the Balance Sheet for Fyumbu for the year ended 31 March 2019.

Assumptions:

"Inventory 1st April 2016 K21,000" is assumed to be the opening inventory for the year ended 31 March 2019 (i.e., 1st April 2018).
"Stock at 31st March 2017 K15 500" is assumed to be the closing inventory for the year ended 31 March 2019 (i.e., 31st March 2019).
The initial trial balance provided does not balance (Debits K352,700, Credits K352,000), resulting in a K700 difference. This difference is reflected in the final Balance Sheet.

Prepare the Trading Account for the year ended 31 March 2019.
$\begin{array}{|l|r|r|} \hline \textbf{Fyumbu} & & \\ \textbf{Trading Account for the year ended 31 March 2019} & & \\ \hline \text{Sales} & & \text{K}191,200 \\ \text{Less: Cost of Goods Sold} & & \\ \quad \text{Opening Inventory (1 April 2018)} & \text{K}21,000 & \\ \quad \text{Purchases (K90,000 + K5,000 omitted)} & \text{K}95,000 & \\ \quad \text{Goods Available for Sale} & \text{K}116,000 & \\ \quad \text{Less: Closing Inventory (31 March 2019)} & \text{K}15,500 & \\ \quad \text{Cost of Goods Sold} & & \text{K}100,500 \\ \hline \textbf{Gross Profit} & & \boxed{\textbf{K90,700}} \\ \hline \end{array}$
Prepare the Profit and Loss Account for the year ended 31 March 2019.
$\begin{array}{|l|r|r|} \hline \textbf{Fyumbu} & & \\ \textbf{Profit and Loss Account for the year ended 31 March 2019} & & \\ \hline \text{Gross Profit} & & \text{K}90,700 \\ \text{Add: Other Income} & & \\ \quad \text{Discount Received} & \text{K}4,000 & \\ \quad \text{Decrease in Provision for Doubtful Debts (K1,800 - K1,360)} & \text{K}440 & \\ \quad \text{Total Income} & & \text{K}4,440 \\ \hline \text{Total Revenue and Other Income} & & \text{K}95,140 \\ \text{Less: Expenses} & & \\ \quad \text{Rent (K10,000 - K2,000 prepaid)} & \text{K}8,000 & \\ \quad \text{Wages and Salaries (K14,000 + K6,000 accrued)} & \text{K}20,000 & \\ \quad \text{Discount Allowed} & \text{K}10,000 & \\ \quad \text{Motor Expenses (K9,400 + K1,600 owing)} & \text{K}11,000 & \\ \quad \text{Bad Debts} & \text{K}5,600 & \\ \quad \text{Depreciation - Office Furniture (6\% of K70,000)} & \text{K}4,200 & \\ \quad \text{Depreciation - Motor Vehicle (7\% of K50,000)} & \text{K}3,500 & \\ \quad \text{Total Expenses} & & \text{K}62,300 \\ \hline \textbf{Net Profit} & & \boxed{\textbf{K32,840}} \\ \hline \end{array}$
Prepare the Balance Sheet as at 31 March 2019.
$\begin{array}{|l|r|r|} \hline \textbf{Fyumbu} & & \\ \textbf{Balance Sheet as at 31 March 2019} & & \\ \hline \textbf{ASSETS} & & \\ \textbf{Non-current Assets} & & \\ \quad \text{Office Furniture (Cost)} & \text{K}70,000 & \\ \quad \text{Less: Accumulated Depreciation (K2,000 + K4,200)} & \text{K}6,200 & \text{K}63,800 \\ \quad \text{Motor Vehicle (Cost)} & \text{K}50,000 & \\ \quad \text{Less: Accumulated Depreciation (K3,000 + K3,500)} & \text{K}6,500 & \text{K}43,500 \\ \quad \textbf{Total Non-current Assets} & & \text{K}107,300 \\ \textbf{Current Assets} & & \\ \quad \text{Inventory} & \text{K}15,500 & \\ \quad \text{Debtors} & \text{K}34,000 & \\ \quad \text{Less: Provision for Doubtful Debts (4\% of K34,000)} & \text{K}1,360 & \text{K}32,640 \\ \quad \text{Rent Pre-paid} & \text{K}2,000 & \\ \quad \text{Cash at Bank (K23,000 - K2,800 drawings)} & \text{K}20,200 & \\ \quad \text{Cash at Hand} & \text{K}8,500 & \\ \quad \textbf{Total Current Assets} & & \text{K}78,840 \\ \textbf{TOTAL ASSETS} & & \boxed{\textbf{K186,140}} \\ \hline \textbf{EQUITY AND LIABILITIES} & & \\ \textbf{Equity} & & \\ \quad \text{Capital (Opening)} & \text{K}134,000 & \\ \quad \text{Add: Net Profit} & \text{K}32,840 & \\ \quad \text{Less: Drawings (K7,200 + K2,800 additional)} & \text{K}10,000 & \\ \quad \textbf{Closing Capital} & & \text{K}156,840 \\ \textbf{Current Liabilities} & & \\ \quad \text{Creditors (K16,000 + K5,000 omitted purchase)} & \text{K}21,000 & \\ \quad \text{Wages and Salaries Accrued} & \text{K}6,000 & \\ \quad \text{Motor Expenses Owing} & \text{K}1,600 & \\ \quad \textbf{Total Current Liabilities} & & \text{K}28,600 \\ \textbf{TOTAL EQUITY AND LIABILITIES} & & \boxed{\textbf{K185,440}} \\ \hline \end{array}$
Note: The Balance Sheet does not balance by K700 (Total Assets K186,140 vs Total Equity and Liabilities K185,440). This discrepancy arises from the original trial balance provided, which had a K700 difference (Debits K352,700, Credits K352,000).

Preparing the trading, profit and loss account.And balance sheet

Step-by-step solution

Prepare the Trading Account for the year ended 31 March 2019.

Prepare the Profit and Loss Account for the year ended 31 March 2019.

Prepare the Balance Sheet as at 31 March 2019.

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