Dauda, a retailer, does not keep proper books of account. The following were balances in his books on January 2013. Premises 70,000 Equipment 8,200 Vehicles 5,100 Inventory 9,500 Accounts receivable 150 Bank 1400 The summary of his bank statement for the twelve months period from 1st January 2013 to 31st December 2013 is as follows: Money paid to the bank: 96,500 Shop takings 1,400 Received from debtors 8,000 Payments made by cheque Inventory purchased 70,500 Delivery Van 6,200 Maintenance of vehicle 1,020 Electricity and water 940 Store boys' wages 5,260 Miscellaneous expenses 962 Additional information; i. Dauda paid all shop takings for the year into the bank apart from monthly drawings of D500 and miscellaneous expenses of D408. ii. He was owing, D7, 600 to supplies for inventory bought. iii. The accounts receivable is to be treated as bad debts. iv. Inventory was valued at D13,620 v. Depreciation for the year was calculated as D720 for equipment and D1,000 for vehicles. You are required to prepare: (a) Statement of Affairs as at 01/01/13 (b) Income Statement for the year ended 31st December 2013
Explanation
In the books of Dauda State of Affairs as at 1st January, 201
(b) Dauda Income statement for the year ended 31st December 2013 D D Sales (96,500+6,000+408+1,400) 104,308 Less: Cost of Sales Opening inventory 9,500 Add Purchases (70,500+7,600) 78,100 87,600 Less closing inventory 13,620 (73,980) Gross profit 30,328 Less: Expenses: Store boy's wages 5,260 Maintenance of vehicle 1,020 Bad debts 150 Miscellaneous exp(962+408) 1,370 Electricity and water 940 Depreciation: equipment 720 vehicle 1,0001,720 10,460 Net profit 19,868
