The following balances are extracted from the books of Mr basantstock ...
To prepare the trading and profit and loss account for the year ended 2018:
Sales: 56,870
Less: Sales return: 400
Net sales: 56,470
Cost of goods sold:
Opening stock: 5,400
Add: Purchases: 10,000
Less: Purchase return: 230
Net purchases: 9,770
Cost of goods available for sale: 15,170
Less: Closing stock: 15,500
Cost of goods sold: 110
Gross profit: 56,360
Operating expenses:
General expenses: 978
Rent and taxes: 382
Carriage: 1,744
Coal and power: 8,572
Wages: 11,700
Manufacturing expenses: 1,036
Salaries: 861
Total operating expenses: 24,273
Net profit before other income and expense: 32,087
Other income:
Discount credit: 22
Net profit before tax: 32,109
Less: Income tax: (Assuming 30% tax rate) 9,632
Net profit after tax: 22,477
To prepare the balance sheet as on 31st December 2018:
Liabilities:
Capital: 5,400
Creditors: 12,400
Total liabilities: 17,800
Assets:
Stock: 15,500
Debtors: 13,580
Bank balance: 900
Cash in hand: 61
Total assets: 29,041
Net worth: 29,041 - 17,800 = 11,241
The balance sheet can be presented as follows:
Liabilities | Amount | Assets | Amount
---|---|---|---
Capital | 5,400 | Stock | 15,500
Creditors | 12,400 | Debtors | 13,580
| | Bank balance | 900
| | Cash in hand | 61
Total | 17,800 | Total | 29,041
Note: The net profit after tax of 22,477 is not shown on the balance sheet as it has already been taken into account in the calculation of the net worth.