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Trial Balance Summary

Trial balance

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peeclark29
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9 views5 pages

Trial Balance Summary

Trial balance

Uploaded by

peeclark29
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Trial Balance Summary

 Cash in hand & bank: 253,000


 Accounts receivable: 110,000
 14% treasury bills: 218,000
 Allowance for bad debts: 20,000 (credit side)
 Beginning inventory: 128,000
 Prepaid insurance: 60,000
 Office supplies: 70,000
 Equipment (at cost): 500,000
 Accumulated depreciation (equipment): 100,000 (credit side)
 Accounts payable: 80,000 (credit side)
 Unearned rent: 90,000 (credit side)
 Transport expenses: 182,000
 Discount received: 195,000 (credit side)
 Sales: 762,000 (credit side)
 Sales discount: 30,000
 Purchase of merchandise: 400,000
 Sales returns & allowance: 40,000
 Purchase discount: 18,000 (credit side)
 Carriage inwards: 90,000
 Carriage on sales: 127,000
 Consulting fee revenue: 73,000 (credit side)
 Rent expenses: 41,000
 Salaries expenses: 53,000
 Capital: 800,000 (credit side)
 Rates payable: 60,000 (credit side)
 Bad debts expenses: 21,000
 Interest: 5,000
Total Debit: 2,328,000
Total Credit: 2,328,000
Adjustments
 (a) Physical count of inventory shows merchandise costing 85,000 is still on hand.
 (b) Telephone expenses accrued for the year is expected to be 95,800.
 (c) Insurance prepaid: 30,000 expired during the year.
 (d) Rent expense of 11,000 relates to 2008.
 (e) Depreciation expense for equipment: 40,000.
 (f) Earned rent of 60,000 from unearned rent.
 (g) 1% of net sales expected to become bad debt.
 (h) 53,000 of office supplies remains unused.
 (i) Consulting fees earned, but not billed, total 31,000.
 (j) Interest on treasury bills accrued for one year but not yet received.
Required
You are asked to:
1. Prepare an income statement for the year ended December 31st, 2007.
2. Prepare a balance sheet as of that date.

Let's start by preparing the Income Statement for the year ended 31st December 2007 and
then the Balance Sheet as of that date.
Step 1: Adjustments
1. Closing inventory: 85,000 (adjusted from the beginning inventory).
2. Telephone expenses: Accrued expense of 95,800.
3. Insurance expense: Prepaid insurance of 30,000 expired during the year.
4. Rent expenses: 11,000 relates to 2008 (adjusted out of current year's expenses).
5. Depreciation on equipment: 40,000.
6. Unearned rent: 60,000 of unearned rent earned during the year.
7. Bad debt provision: 1% of net sales.
8. Office supplies: 53,000 remains unused, so 17,000 is the expense for the year.
9. Consulting fees: 31,000 earned but not received.
10. Interest on treasury bills: Accrued but not received.
Income Statement for the year ended 31st December 2007
Revenue
 Sales: 762,000
 Less: Sales returns & allowances: (40,000)
Net Sales: 722,000
 Add: Consulting fee revenue (earned): 73,000
 Add: Unearned rent earned: 60,000
 Add: Interest on treasury bills (accrued): 31,000
Total Revenue: 886,000
Cost of Goods Sold
 Beginning Inventory: 128,000
 Add: Purchases: 400,000
 Less: Purchase discount: (18,000)
 Add: Carriage inwards: 90,000
Goods available for sale: 600,000
 Less: Closing Inventory: (85,000)
Cost of Goods Sold: 515,000
Gross Profit
 Revenue: 886,000
 Less: Cost of Goods Sold: (515,000)
Gross Profit: 371,000
Operating Expenses
 Transport expenses: 182,000
 Salaries expenses: 53,000
 Rent expenses: 41,000
 Telephone expenses: 95,800
 Depreciation expenses (equipment): 40,000
 Office supplies used: 17,000
 Bad debts expenses: 21,000
 Provision for bad debts (1% of net sales 722,000): 7,220
Total Operating Expenses: (457,020)
Operating Profit (Loss)
 Gross Profit: 371,000
 Less: Operating Expenses: (457,020)
Operating Loss: (86,020)
Other Income
 Sales discount received: 30,000
Net Loss: (56,020)

Balance Sheet as at 31st December 2007


Assets
 Current Assets:
o Cash in hand & bank: 253,000
o Accounts receivable: 110,000
o 14% Treasury bills (including interest accrued): 218,000 + 31,000 = 249,000
o Inventory: 85,000
o Prepaid insurance: 30,000 (adjusted to account for expiration)
o Office supplies: 53,000 (adjusted for remaining supplies)
o Consulting fees receivable: 31,000
Total Current Assets: 811,000
 Non-Current Assets:
o Equipment (at cost): 500,000
o Less: Accumulated depreciation: (140,000)
Net Equipment: 360,000
Total Assets: 1,171,000
Liabilities
 Current Liabilities:
o Accounts payable: 80,000
o Unearned rent (after adjustment): 30,000
o Rent payable: 11,000
o Rates payable: 60,000
o Bad debts provision: 7,220
o Telephone expense accrued: 95,800
Total Current Liabilities: 284,020
Equity
 Capital: 800,000
 Add: Net loss: (56,020)
Total Equity: 743,980
Total Liabilities & Equity: 1,171,000

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