Worked Example of Simple Financial Statements

Question
The following information is available for Bob, a trader, for the year ended 30 April 2020.

Dr Cr
$ $
Capital at 1 May 2019 100 000
Revenue 488 000
Ordinary goods purchased 329 500
Inventory at 1 May 2019 36 360
Carriage on purchases 4 250
Carriage on sales 6 390
Sales returns 1 360
Purchases returns 500
Commission received 1 480
Rent 12 000
Insurance 8 400
Salaries and Wages 58 200
Electricity, Water and Telephone 12 940
General Expenses 12 520
Office equipment 31 000
Motor Vehicles 19 000
Furniture and fittings 30 000
Cash at Bank 22 500
Cash in hand 14 150
Trade receivables 15 300
Trade payables 8 890
Loan from Friendship Bank 25 000
Drawings 10 000
623 870 623 870

Additional Information:

Inventory at 30 April 2020 was valued at $ 42 850.

Required:

i. Prepare Bob’s income statement for the year ended 30 April 2020.
ii. Prepare Bob’s statement of financial position as at 30 April 2020.
 Worked Example of Simple Financial Statements

Solution
Bob’s Income Statement for the year ended 30 April 2020
$ $ $
Revenue 488000
Less Sales returns 1360
486640
Less Cost of Sales
Opening Inventory 36360
Add Ordinary goods purchased 329500
Add Carriage on purchases 4250
Less Purchases returns (500) 333250
Cost of goods available for sale 369610
Less Closing Inventory (42850) 326760
Gross Profit 159880
Add Other Income
Commission received 1480
161360
Less Expenses
Carriage on sales 6390
Rent 12000
Insurance 8400
Salaries and Wages 58200
Electricity, Water and Telephone 12940
General Expenses 12520 110450
Profit for the year 50910

Bob’s Statement of Financial Position as at 30 April 2020

$ $ $
Non-Current Assets
Office equipment 31000
Motor Vehicles 19000
Furniture and fittings 30000
80000
Current Assets
Inventory 42850
Trade receivables 15300
Cash equivalent 22500
Cash 14150 94800
Total Assets 174800
Equity and Liabilities
Capital at start 100000
Add Profit for the year 50910
150910
Less Drawings (10000)
Capital at end 140910
Non-Current Liabilities
Loan from Frienship Bank 25000

Current Liabilities
Trade payables 8890
Total Equity and Liabilities 174800