You are required to prepare the final accounts of a trader from the following information:
Assets and Liabilities:
|
1.1.2008 $
|
31.12.2008 $
|
|
Furniture
|
18,000
|
19,050
|
|
Stock
|
24,000
|
21,000
|
|
Debto$
|
48,000
|
?
|
|
Credito$
|
33,000
|
45,000
|
|
Prepaid Expenses
|
1,800
|
2,100
|
|
Outstanding Expenses
|
6,000
|
5,400
|
|
Cash in hand and at bank
|
3,600
|
1,875
|
Cash transactions during the year 2008:
|
Receipts from Debto$ (after allowing 2 1/2% discount)
|
1,75,000
|
|
Bills Receivable discounted (at an average rate of 2%)
|
18,375
|
|
Paid to Creditor (@ 2% discount)
|
1,17,600
|
|
Freight inward
|
9,000
|
|
Drawings
|
21,000
|
|
Furniture purchased
|
3,000
|
|
4% Investments purchased at 96% (on 1.7.2008)
|
28,800
|
|
Expenses including salary
|
43,500
|
|
Miscellaneous receipts
|
1,500
|
During the year Bills Receivable received were $30,000; $6,000 of which are endo$ed in favour of creditor, of the later a bill for $ 1,200 was dishonoured.
Goods costing $ 2,700 were used for advertising materials
Goods are invariably sold to show a profit of 50% on cost
Difference in cash, if any, is to be treated as drawings or introduction of capital.
Provision for doubtful debts is to be provided @ 2 1/2% on debto$.