a. The following is the trial balance of Abete Trading Company as at 31st December...
a. The following is the trial balance of Abete Trading Company as at 31st December 2020:
| Le | Le | |
Depreciation of fixed assets | 9,260 | |
Stock as 1st January 2020 | 3,600 | |
Purchases and sales | 100,000 | 174,000 |
General expenses | 170,00 | |
Fixed assets | 42,600 | |
Returns | 2,400 | 4,800 |
Discounts | 400 | 2,000 |
Salaries and wages | 21,000 | |
| Suspense account | 3,060 | |
| 190,060 | 190,060 |
Additional information
(i) Stock in hand on 31st December 2020 was Le 4,000
(ii) Investigation revealed the following errors which necessitated the opening of suspense account:
- Drawings of Le 1,000 was posted to salaries and wages account
- Furniture bought at Le 1,560 was wrongly debited to fixed asset as Le 300
- Purchases day book was undercast by Le 2,000
- Discount allowed of Le 200 to a customer had not been posted to the customer's account
(iii) Depreciation of fixed assets is 10% per annum.
You are required to:
Correct the errors through journal entries (no narration is required).
b. The following is the trial balance of Abete Trading Compnay as at 31st December 2020:
| Le | Le | |
Depreciation of fixed assets | 9,260 | |
Stock as 1st January 2020 | 3,600 | |
Purchases and sales | 100,000 | 174,000 |
General expenses | 170,00 | |
Fixed assets | 42,600 | |
Returns | 2,400 | 4,800 |
Discounts | 400 | 2,000 |
Salaries and wages | 21,000 | |
| Suspense account | 3,060 | |
| 190,060 | 190,060 |
Additional information
(i) Stock in hand on 31st December 2020 was Le 4,000
(ii) Investigation revealed the following errors which necessitated the opening of suspense account:
- Drawings of Le 1,000 was posted to salaries and wages account
- Furniture bought at Le 1,560 was wrongly debited to fixed asset as Le 300
- Purchases day book was undercast by Le 2,000
- Discount allowed of Le 200 to a customer had not been posted to the customer's account
(iii) Depreciation of fixed assets is 10% per annum.
You are required to:
Prepare Trading, Profit and Loss Account for the year ended 31st December, 2020
Explanation
a.
Journal | Dr | Cr |
| Le | Le | |
Suspense | 1000 | |
| Drawings | 1000 | |
| Fixed assets | 1260 | |
Suspense | 1260 | |
Purchases | 2000 | |
| Suspense | 2000 | |
Discount Allowed | 200 | |
| Suspense | 200 |
b.
Abete Trading Company
Trading,Profit and Loss Account for the year ended 31st December, 2020
| Le | Le | ||
Opening stock | 3600 | Sales | 174000 |
Add purchases | 102000 | Less Returns | 2400 |
| 105600 | 171600 | ||
Less Returns | 4800 | ||
| 100800 | |||
Less closing stock | 4000 | ||
| 96800 | |||
Gross profit | 74800 | ||
| 171600 | 171600 | ||
Expenses | Gross profit b/d | 74800 | |
Discount allowed | 600 | Discount received | 2000 |
| General expenses | 17000 | ||
| Net profit | 39200 | ||
| 76800 | 76800 |