Illustration of balance sheet
The following list of balances as at 30 September 20X9 has been extracted from the books of Brick and Stone, trading in partnership, sharing the balance of profits and losses in the proportions 3:2 respectively.
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|
Kshs.
|
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Printing, stationery and postages
|
3,500
|
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Sales
|
322,100
|
|
Inventory in hand at 1 October 20x8
|
23,000
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Purchases
|
208,200
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|
Rent and rates
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10,300
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Heat and light
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8,700
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Staff salaries
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36,100
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Telephone charges
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2,900
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Motor vehicle running costs
|
5,620
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Discounts allowable
|
950
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Discounts receivable
|
370
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Sales returns
|
2,100
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|
Purchases returns
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6,100
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Carriage inwards
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1,700
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|
Carriage outwards
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2,400
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Fixtures and fittings: at cost
|
26,000
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Provision for depreciation
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11,200
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Motor vehicles: at cost
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46,000
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Provision for depreciation
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25,000
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Provision for doubtful debts
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300
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Drawings: Brick
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24,000
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Stone
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11,000
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Current Account balances at 1 October 20x8:
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|
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Brick
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3,600
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Stone
|
2,400
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Capital account balances at 1 October 20x8:
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|
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Brick
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33,000
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Stone
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17,000
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Receivables
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9,300
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Payables
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8,400
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Balance at bank
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7,700
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Additional information:
1. Kshs.10,000 is to be transferred from Brick’s capital account to a newly opened Brick Loan Account on 1 July 20X9. Interest at 10 per cent per annum on the loan is to be credited to Brick.
2. Stone is to be credited with a salary at the rate of Kshs.12,000 per annum from 1 April 20X9.
3. Inventory in hand at 30 September 20X9 has been valued at cost at Kshs.32,000.
4. Telephone charges accrued due at 30 September 20X9 amounted to Kshs.400 and rent of Kshs.600 prepaid at that date.
5. During the year ended 30 September 20X9 Stone has taken goods costing Kshs.1,000 for his own use.
6. Depreciation is to be provided at the following annual rates on the straight line basis:
Fixtures and fittings 10%
Motor Vehicles 20%
Required:
(a) Prepare a trading and profit and loss account for the year ended 30 September 20X9.
(b) Prepare a balance sheet as at 30 September 20X9 which should include summaries of the partner’s capital and current accounts for the year ended on that date.
Note: In both (a) and (b) vertical forms of presentation should be used.
Solution:
a)
Brick and Stone
Trading Profit and Loss Account for the year ended 30 September 20X9
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Kshs.
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Kshs.
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Kshs.
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Sales
|
|
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322,100.00
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Less sales returns
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|
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(2,100.00)
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|
|
|
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320,000.00
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Less cost of sales
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|
|
|
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Opening inventory
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23,000.00
|
|
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Purchases
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207,200.00
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|
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Carriage inwards
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1,700.00
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|
|
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208,900.00
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Less purchases returns
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(6,100.00)
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202,800.00
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|
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225,800.00
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Less closing inventory
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(32,000.00)
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(193,800.00)
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Gross Profit
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|
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126,200.00
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Discounts receivable
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|
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370.00
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|
|
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126,570.00
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Less Expenses:
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|
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Printing, stationery and postages
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3,500.00
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|
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Rent and rates
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9,700.00
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|
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Heat and light
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8,700.00
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|
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Staff salaries
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36,100.00
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|
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Telephone charges
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3,300.00
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|
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Motor vehicle running costs
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5,620.00
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|
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Discounts allowable
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|
950.00
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|
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Carriage outwards
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2,400.00
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|
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Depreciation: Fixtures and fittings
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2,600.00
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Motor vehicles
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9,200.00
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Loan – Brick
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250.00
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(82,320.00)
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Net profit
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|
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44,250.00
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Less Salary – Stone
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(6,000.00)
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|
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38,250.00
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Balance of profits shared in PSR
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|
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Brick
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22,950.00
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|
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Stone
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15,300.00
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(38,250.00)
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b)
Brick and Stone
Balance Sheet as at 30 September 20X9
|
Cost
|
Accumulated Depreciation
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NBV
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Non Current assets
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Kshs.
|
Kshs.
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Kshs.
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Fixtures and fittings
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26,000.00
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(13,800.00)
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12,200.00
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Motor vehicles
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46,000.00
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(34,200.00)
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11,800.00
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|
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72,000.00
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(48,000.00)
|
24,000.00
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Current Assets
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|
|
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Inventory
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32,000.00
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|
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Receivables
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9,300.00
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|
|
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Less provision for doubtful debts
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(300.00)
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9,000.00
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|
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Prepaid expenses
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600.00
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|
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Balance at bank
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7,700.00
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|
|
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49,300.00
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Current liabilities
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|
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Payables
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8,400.00
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|
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Accrued expenses
|
400.00
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(8,800.00)
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|
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Net working capital
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|
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40,500.00
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|
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64,500.00
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Capital accounts
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|
|
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Brick
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|
23,000.00
|
|
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Stone
|
|
17,000.00
|
40,000.00
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Current Account
|
|
|
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Brick
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2,800.00
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|
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Stone
|
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11,700.00
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14,500.00
|
|
|
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54,500.00
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Loan Account
|
|
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10,000.00
|
|
|
|
|
64,500.00
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Current Account
|
|
Brick
|
Stone
|
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Brick
|
Stone
|
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Kshs.
|
Kshs.
|
|
Kshs.
|
Kshs.
|
|
Drawings
|
24,000.00
|
12,000.00
|
Balance b/f
|
3,600.00
|
2,400.00
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|
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Interest/salary
|
250.00
|
6,000.00
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Bal c/d
|
2,800.00
|
11,700.00
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Profit share
|
22,950.00
|
15,300.00
|
|
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26,800.00
|
23,700.00
|
|
26,800.00
|
23,700.00
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