ishtal
Aug 23, 2011, 12:52 AM
Jeremy, a sole trader, who specialises in the buying and selling of ready-made garments, commenced
business in January 2010. However, despite certain information were kept with regards to business
transactions effected in the year 2010, no proper accounting records were being prepared. For the
purpose of assessing the profitability and financial position of his business, he has provided you the
following information.
TASK 1
You are required to prepare appropriate Ledger Accounts, a Trial Balance, a Trading and Profit and Loss
Accounts (Statement of Comprehensive Income) and a Balance Sheet (Statement of Financial Position)
for the year ended 31 December 2010. You should assume that no VAT return has been made in the
year 2010.
1. On 15 January 2010, Jeremy introduced Rs 1,000,000 in the bank account of the company as capital.
2. He purchased goods mainly from Floreal Knitwear, Firemount Textile and Aquarelle Ltd. On 18
January 2010, the following purchases, which were paid by cheque, were made:
(a) From Floreal Knitwear – Rs 205,000 excluding 15% VAT
(b) From Firemount – Rs 188,000 including VAT 15%
(c) Aquarelle Ltd – Rs 156,000 excluding VAT 15%
3. The transportation fees, paid by cheque, on 20 January 2010, for the above purchases amounted to
Rs 5,000.
4. As at 30 January 2010, cash sales amounting Rs 221,000 excluding VAT was made. On 31 January
2010, cash collected for sales made on previous day were banked.
5. On 22 February 2010, credit sales were made to the following persons:
(a) Hyatt – Rs 50,000 excluding VAT 15%
(b) Gibson – Rs 117,500 including VAT 15%
6. Goods of value Rs 22,500 including VAT 15% was returned by Gibson on 28 February 2010.
7. As at 31 March 2010, sales amounting Rs 100,000 excluding VAT 15% were made. Payment was
received through bank transfer on same date.
8. On 15 April 2010, Jeremy successfully negotiated for a discount of 3% on credit purchases of amount
Rs 200,000 (before discount and before VAT 15%) made from Aquarelle Ltd.
9. Credit purchase amounted to Rs 350,000 exclusive VAT 15% were made from Floreal Knitwear on 02
May 2010. Since payment (by cheque) was made on 30 May 2010 that is before 30 days, an
additional discount of 2% on amount before VAT was allowed. It is to be assumed that the discount
would not affect VAT amount.
Accounts Clerk Course – Saturday Date _____________
Case Study
2
10. Credit sales of Rs 500,000 excluding VAT 15% were made to Hyatt on 03 May 2010.
11. Goods of value Rs 500,000 excluding VAT was purchased from Firemount Ltd on credit on 01 June
2010. Credit note amounting Rs 10,000 excluding VAT was sent to Firemount the next day.
12. Credit sales amounted to Rs 763,200 inclusive of VAT was made to various customers in the month
July 2010. No payment has been received as at 31 December 2010.
13. As at 31 December 2010, it was decided to write off a debt of Rs 10,000 owed from a debtor. Also, a
provision for a bad debt of 5% needs to be created on debtors amounting Rs 550,000.
14. A van was purchased on 01 August 2010 for an amount of Rs 200,000 paid by cheque. Depreciation
is to be 20% on the cost of the vehicle per annum.
15. Rent amounting Rs 13,000 per month is paid through standing order for the 12 months in the year
2010. As at 31 December 2010, total rent paid was Rs 169,000.
16. In the year 2010, amount paid through bank transfer for salaries and wages was Rs 200,000. As at
31 December 2010, NPS and PAYE amounting Rs 3,000 and Rs 2,000 respectively has not been
remitted to the authority concerned.
17. Other expenses (paid by cheque) made in the year 2010 were.
(a) Water – Rs 15,000
(b) Electricity – Rs 60,000
(c) Telecommunications – Rs 65,000
(d) Advertising – Rs 40,000
(e) Sundry expenses – Rs 30,000
18. Stock at 31 December 2010 amounted to Rs 400,000.
1. Briefly comment on the profitability and financial position of Jeremy’s business (pay attention to
amount of sales, profit or loss, debtors, creditors, bank balance)
2. Jeremy has heard of a ‘petty cash system’. However, he is not aware of what it is. You are required
to provide him a short description of the petty cash system and of its usefulness in a business
business in January 2010. However, despite certain information were kept with regards to business
transactions effected in the year 2010, no proper accounting records were being prepared. For the
purpose of assessing the profitability and financial position of his business, he has provided you the
following information.
TASK 1
You are required to prepare appropriate Ledger Accounts, a Trial Balance, a Trading and Profit and Loss
Accounts (Statement of Comprehensive Income) and a Balance Sheet (Statement of Financial Position)
for the year ended 31 December 2010. You should assume that no VAT return has been made in the
year 2010.
1. On 15 January 2010, Jeremy introduced Rs 1,000,000 in the bank account of the company as capital.
2. He purchased goods mainly from Floreal Knitwear, Firemount Textile and Aquarelle Ltd. On 18
January 2010, the following purchases, which were paid by cheque, were made:
(a) From Floreal Knitwear – Rs 205,000 excluding 15% VAT
(b) From Firemount – Rs 188,000 including VAT 15%
(c) Aquarelle Ltd – Rs 156,000 excluding VAT 15%
3. The transportation fees, paid by cheque, on 20 January 2010, for the above purchases amounted to
Rs 5,000.
4. As at 30 January 2010, cash sales amounting Rs 221,000 excluding VAT was made. On 31 January
2010, cash collected for sales made on previous day were banked.
5. On 22 February 2010, credit sales were made to the following persons:
(a) Hyatt – Rs 50,000 excluding VAT 15%
(b) Gibson – Rs 117,500 including VAT 15%
6. Goods of value Rs 22,500 including VAT 15% was returned by Gibson on 28 February 2010.
7. As at 31 March 2010, sales amounting Rs 100,000 excluding VAT 15% were made. Payment was
received through bank transfer on same date.
8. On 15 April 2010, Jeremy successfully negotiated for a discount of 3% on credit purchases of amount
Rs 200,000 (before discount and before VAT 15%) made from Aquarelle Ltd.
9. Credit purchase amounted to Rs 350,000 exclusive VAT 15% were made from Floreal Knitwear on 02
May 2010. Since payment (by cheque) was made on 30 May 2010 that is before 30 days, an
additional discount of 2% on amount before VAT was allowed. It is to be assumed that the discount
would not affect VAT amount.
Accounts Clerk Course – Saturday Date _____________
Case Study
2
10. Credit sales of Rs 500,000 excluding VAT 15% were made to Hyatt on 03 May 2010.
11. Goods of value Rs 500,000 excluding VAT was purchased from Firemount Ltd on credit on 01 June
2010. Credit note amounting Rs 10,000 excluding VAT was sent to Firemount the next day.
12. Credit sales amounted to Rs 763,200 inclusive of VAT was made to various customers in the month
July 2010. No payment has been received as at 31 December 2010.
13. As at 31 December 2010, it was decided to write off a debt of Rs 10,000 owed from a debtor. Also, a
provision for a bad debt of 5% needs to be created on debtors amounting Rs 550,000.
14. A van was purchased on 01 August 2010 for an amount of Rs 200,000 paid by cheque. Depreciation
is to be 20% on the cost of the vehicle per annum.
15. Rent amounting Rs 13,000 per month is paid through standing order for the 12 months in the year
2010. As at 31 December 2010, total rent paid was Rs 169,000.
16. In the year 2010, amount paid through bank transfer for salaries and wages was Rs 200,000. As at
31 December 2010, NPS and PAYE amounting Rs 3,000 and Rs 2,000 respectively has not been
remitted to the authority concerned.
17. Other expenses (paid by cheque) made in the year 2010 were.
(a) Water – Rs 15,000
(b) Electricity – Rs 60,000
(c) Telecommunications – Rs 65,000
(d) Advertising – Rs 40,000
(e) Sundry expenses – Rs 30,000
18. Stock at 31 December 2010 amounted to Rs 400,000.
1. Briefly comment on the profitability and financial position of Jeremy’s business (pay attention to
amount of sales, profit or loss, debtors, creditors, bank balance)
2. Jeremy has heard of a ‘petty cash system’. However, he is not aware of what it is. You are required
to provide him a short description of the petty cash system and of its usefulness in a business