Incomplete

Records
CHAPTER 17
Statement of
Affairs
 Formula for Calculating Profit
Closing Opening Profit
Capital Capital

Closing Opening Profit

Drawings
Capital Capital

Closing Opening Capital

Drawings
Capital Capital Introduced

Profit
Calculating Profit with Ledger
Refer to Capital Account’s Ledger

Date Details Fo $ Date Details Fo $

Year 1 Year 1
Dec 31 Drawings xxx Jan 1 Balance b/d xxx
Balance c/d xxx Dec 31 Bank xxx
Net Profit ?
xxx xxx
Year 2
Jan 1 Balance b/d xxx
Example 17.1
Vijay is a sole trader. He has not kept a full set of double entry records, but is able to
provide the following information about his assets and liabilities.

1 May 2008 30 April 2009

$ $
Premises at cost 30 000 30 000
Equipment at cost 9 000 9 000
Motor Vehicle at cost 8 000 8 000
Stock 14 000 16 000
Debtors 8 500 9 400
Creditors 8 000 9 200
Bank 1 200 -
Bank Overdraft - 900
Accrued Expenses - 100
Prepaid Expenses 120 130
Example 17.1
Additional information:

During the year ended 30 April 2009, Vijay purchased additional

equipment for the business, costing $ 7 000, out of his personal funds.
This is in addition to the equipment listed above.
His cash drawings during the year amounted to $ 7 000, and he also
took goods costing $ 3 000 for personal use.
On 30 April 2009, it was decided that all the equipment should be
depreciated by 10%, and the motor vehicle should be depreciated by 25
%.
It was also decided to create a provision for doubtful debts of 2 % of the
debtors
Example 17.1
Questions:
◦ Prepare a statement of affairs of Vijay at 1 May 2008.
◦ Prepare a statement of affairs of Vijay at 30 April 2009.
◦ Calculate Vijay’s profit for the year ended 30 April 2009.
Prepare a statement of affairs of Vijay
at 1 May 2008. Vijay
Statement of Affairs at 1 May 2008

$ $ $
Fixed Assets Cost
Premises 30,000
Equipment 9,000
Motor Vehicle 8,000
47,000
Current Assets
- Stock 14,000
- Debtors 8,500
- Prepayments 120
- Bank 1,200
23,820
Current Liabilities

- Creditors ( 8,000)

Working Capital (Current Assets - Current Liabilities) 15,820

Capital Employed (Fixed Assets + Working Capital) 62,820

Long Term Liabilities

- Bank Loan (2,820)

60,000

Financed by:

Capital

Balance 60,000

60,000
Prepare a statement of affairs of Vijay
at 30 April 2009. Vijay
Statement of Affairs at 30 April 2009

$ $ $
Fixed Assets Cost Depreciation Book
to date Value
Premises 30,000 - 30,000
Equipment 16,000 1,600 14,400
Motor Vehicle 8,000 2,000 6,000
54,000 3,600 50,400
Current Assets
Stock 16,000
Debtors 9,400
Less: Provision for doubtful debts 188 9,212
Prepayments 130
25,342
Current Liabilities
Creditors 9,200
Accruals 100
Bank Overdraft 900 (10,200)
Working Capital 15,142
Capital Employed 65,542

Financed by:
Capital
Balance 65,542
65,542
Calculate Vijay’s profit for the
year ended 30 April 2009.
Date Details Fo $ Date Details Fo $

2009 2008
Apl 30 Drawings 5,000 May 1 Balance b/d 62,820
Purchases 3,000 2009 ?
Balance c/d 65,542 Apl 30 Equipment 7,000
Net Profit 3,722
73,542 73,542
Year 2
Jan 1 Balance b/d 65,542
Preparation for
Complete Final
Accounts
CALCULATING SALES AND PURCHASES AND
BALANCING BANK ACCOUNT
Example 17.3
Anjali is a sole trader. She maintains a bank account, but not a full set of
double entry records. She provided the following information:
1 July 2004 30 June 2005
$ $
Premises at cost 60,000 60,000
Equipment (cost $22,500) 18,000 ?
Stock28,100 29,800
Debtors 23,800 26,800
Creditors 19,700 20,200
Accrued General Exp 200 -
Prepaid General Exp - 340
Bank 12,700 ?
Example 17.3
Anjali is a sole trader. She maintains a bank account, but not a full set of
double entry records. She provided the following information:
1 July 2004 30 June 2005
$ $
Premises at cost 60,000 60,000
Equipment (cost $22,500) 18,000 ?
Stock28,100 29,800
Debtors 23,800 26,800
Creditors 19,700 20,200
Accrued General Exp 200 -
Prepaid General Exp - 340
Bank 12,700 ?
Example 17.3
Summary of receipts and payments for the year:

Receipts $ Payments $
Receipts from debtors 31,600 Payments to
creditor 249,400
Cash Sales 12,000 General Expenses 19,620
Drawings 38,400
Wages 40,000
Property Tax 3,800
Insurance1,900
Equipment 8,000
Example 17.3
Additional Infrormation:
◦ During the year Anjali took goods costing $ 4000 for her
own use.
◦ On 30 June 2005, equipment should be depreciated by
10% on the cost of equipment owned at that date.
◦ On 30 June 2005, it was decided to create a provision for
doubtful debts of 2 ½ % of the debtors
Required:
◦ Prepare the trading and profit and loss account for Anjali
for the year ended 30 June 2005 and a balance sheet at
30 June 2005.
1. Opening Capital
Statement of Affairs at 1 July 2004

$ $ $
Fixed Assets Cost Depreciation Book
to date Value
Premises60,000 - 60,000
Equipment 22,500 4,500 18,000
82,500 4,500 78,000
Current Assets
Stock 28,100
Debtors 23,800
Bank 12,700
64,600
Current Liabilities
Creditors 19,700
Accruals 200 19,900
Working Capital 44,700
Capital Employed 122,700

Financed by:
Capital
Balance 122,700
122,700
 2. Sales for the year
• Credit Sales (Refer to Debtors' Ledger)
Anjali
Nominal Ledger
Debtors Account
Date Details Fo $ Date Details Fo $

2004 2005
Jul 1 Balance b/d 23,800 Jun 30 Bank 331,600
2005 Balance c/d 26,800
Jun 30 Sales 334,600
…………….
358,400 358,400
2005
Jul 1 Balance b/d 26,800

Total Sales
$
Credit Sales 334,600
Cash Sales 12,000
Total Sales 346,600
 3. Purchases for the year
• Credit Purchases (Refer to Creditors Ledger)

Anjali
Nominal Ledger
Creditors Account
Date Details Fo $ Date Details Fo $
2005 2004
Jun 30 Bank 249,400 Jul 1 Balance b/d 19,700
Balance c/d 20,200 2005
249,900
Jun 30 Purchases …………….
269,600 269,600
2005
Jul 1 Balance b/d 20,200

Total Purchases
$
Credit Purchases 249,900
Cash Purchases 0 +
Total Purchases 249,900
4. Closing Bank Balance
Anjali
Nominal Ledger
Bank Account

Date Details Fo $ Date Details Fo $

2004 2005
Jul 1 Balance b/d 12,700 Jun 30 Total
2005 Payments 361,120
Jun 30 Total
Receipts 343,600
Balance c/d 4,820
361,120 361,120
2005
Jul 1 Balance b/d 4,820
 Anjali
Trading Account for the year ended 30 June 2004
$ $ $
Sales 346 600
Less: Cost of Sales
Opening Stock 28 100
Purchases 249 900
Less: Goods for own use 4 000 245 900
274 000
Less: Closing Stock 29 800 244 200
Gross Profit 102 400
 Anjali
Profit & Loss Account for the year ended 30 June 2004
$ $ $
Gross Profit 102 400
Less: Expenses:
General Expenses 19 080
Wages 40 000
Property Tax 3 800
Insurance 1 900
Provision for doubtful debts 670
Depreciation of equipment 3 050 68 500
Net Profit 33 900
Accounting Ratio
Margin, Mark-up and Stock
Turnover
Margin, Mark-up and Stock
Turnover