Financial Accounting Test Paper (With Answer) No.IR 2 On Incomplete Records

September 25th, 2008 Comments off
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Financial Accounting Test Paper (With Answer) No.IR 2 On Incomplete Records

Question:

Jim did not keep a Ledger. He began trading on 1 January Year 2000 with business premises costing $25,000 and machines costing $20,000. At 31st December Year 2006 and 2007 his other assets and liabilities were summarized as follows:

 

31/12/06

31/12/07

 

$

$

Bank overdraft

5,040

3,270

Trade creditors

4,450

4,820

Accrued expenses

570

370

Prepayments

1,250

1,500

Trade debtors

12,300

14,600

 

 

 

Stocks

 

 

Finished goods

7,900

10.050

Work-in-progress

5,300

4,600

Raw materials

6,900

7,790

Loan repayable 31 Dec 2010

-

500

The machines are depreciated at 10% per annum using the straight line method. One of the original machines which had cost $1,500 was sold on 1 January 2007 for its written down value of $900.

Jim introduced further capital of $10,000 into the business on 1 January 2007. His drawings for 2007 were $12,000

Required:

Prepare

(a)  Statement of Affairs at 31 December 2006 and 31 December 2007, in columnar form, showing clearly the figure for closing capital for each year (18 marks)

(b) calculation of Jim’s net profit for 2007 using the capitals found in (a) above (7 marks)

[REFER ANSWER]

 

 

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