CHAPTER 11: FINANCIAL ACCOUNTING FOR SOLE TRADER

By Annie WPL

Compiled by Annie WPL 1

Learning Objectives

• Understand some basic accounting terms.• The computation of gross profit and net profit

with simple adjustments like outstanding and prepaid expenses and incomes, accruals and prepayments etc.

• To prepare a comprehensive balance sheet.

Compiled by Annie WPL 2

Question

Compiled by Annie WPL 3

DR CRRM RM

Purchases and sales 92,800 157,165Cash at bank 4,100Cash in hand 324Capital account 1 March 2008 11,400Drawings 17,100Office furniture 2,900Rent 3,400Wages and salaries 31,400Discounts 820 160Debtors and creditors 12,316 5,245Stock 1 March 2008 4,120Provision for doubtful debts 1 March 2008 405Delivery van 3,750Van running costs 615Bad debts written off 730

174,375 174,375

The following trial balance was extracted from the books of R Giggs at the close of business on 28 February 2009.

Notes:1.Stock 28 February 2009 RM2,400.2.Wages and salaries accrued at 28 February

2009, RM340.3.Rent prepaid at 28 February 2009, RM230.

Compiled by Annie WPL 4

4. Van running costs owing at 28 February 2009, RM72.

5. Increase the provision for doubtful debts by RM91.

6. Provide for depreciation as follow: Office furniture RM380, delivery van RM1,250.

Compiled by Annie WPL 5

Required:• Draw up the trading and profit and loss

account for the year ending 28 February 2009 together with a balance sheet as on 28 February 2009.

Compiled by Annie WPL 6