Double-Entry Bookkeeping Problem 21 Mr. Simple has been trading for some years as a wine merchant. The following list of balances has been extracted from his ledger as at 30 April 2018, the end of his most recent financial year. Capital 83,887 Sales 259,870 Trade creditors 19,840 Returns out 13,407 Provision for doubtful debts 512 Discounts allowed 2,306 Discounts received 1,750 Purchases 135,680 Returns inwards 5,624 Carriage outwards 4,562 Drawings 18,440 Carriage inwards 11,830 Rent, rates and insurance 25,973 11,010 Heating and lighting Postage, stationery and telephone 2,410 Advertising 5,980 Salaries and wages 38,521 Bad debts 2,008 Cash in hand 534 Cash at bank 4,440 Stock as at 1st May 2017 15,654 Trade debtors 24,500 Fixtures and fittings – at cost 120,740 Provision for depreciation on fixtures and fittings – as at 30th April 2018 63,020 Deprecation expense 12,074 The following additional information as at 30th April 2018 is available: (1) Stock at the close of business was valued at £17,750. (2) Insurances have been prepaid by £1,120. (3) Heating and lighting is accrued by £1,360. (4) Rates have been prepaid by £5,435. (5) The provision for doubtful debts is to be adjusted so that it is 3% of trade debtors. Required: Prepare Mr. Simple's income statement for the year ended April 30th, 2018 and a statement of financial position (in vertical format) as at that date. All the lines in the blank templates provided should be filled in. It is not required to compile adjusted TB, but you'd better do as workings.) Adiustments Mr. Simple's Income statement for the year ended April 30th, 2018 Sales less: Net sales less: Cost of sales plus: Opening inventory plus: Purchases less: plus: less: less: Closing inventory Gross profit less: Expenses Net profit for the year Mr. Simples's Statement of Financial Position as at 30th April 2018 Assets at cost dep'n NBV Non-current assets Current assets Trade receivables less: Provision for doubtful debts Total assets Capital Capital | (less) Drawings (add) Retained profit Current liabilities Total liabilities and capital
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