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Chippendale is the owner of a retired and the acounts of the business were subsequenty kept...

Question:

Chippendale is the owner of a retired and the acounts of the business were subsequenty kept by Chippendale furnidure shop U3TDEC His double-entry was accurate fi.e debits - credits) but he did not aysel which T accounts to use Chippendale produced the flwing trial balance at 31 Decemtet 20x9 Cr 22,035 12,000 Dr Capital Chippendale Drawings- Chippendale Loan at 15% interest per annum Freehold property Motor vehicles-cos Motor vehicles-accumulated depreciation Shop fittings-cost 22,600 17,500 20,800 16,300 32,832 4200 3,710 Shop fittings-accumulated depreciation Inventory at 31 December 20x8 Trade receivables at 31 December 20X8 Trade payables at 31 December 20x8 Purchases General expenses Wages Cash sales Credit sales Provision for doubtful debts at 31 December 20X8 7,817 14,712 185,298 37,146 42,183 254,451 32,870 367 3,431 Bank Cash 300 365,276 365,276 The following additional information is available: 1. When Chippendale acquired his present premises he also purchased an identical shop next door, the two shops each costing E55,000. During 20X9 the shop next door was sold for £127,500.Chippendale credited the full amount of the proceeds to te freehold property T account 2. Chippendale did not know how to deal with receivables so he ignored them entirely The credit sales account actually represents the cash received from customers during 20x9. By matching these receipts against the file of sales invoices, it appears that the amount due by customers at 31 December 20x9 is £14,898. Of this total, £832 represents bad debts and a further E437 is regarded as doubtful. 3. A similar situation existed with the payables. The purchases account is actually the total amount paid to suppliers during 20x9, the total of unpaid invoices at 31 December 20X9 is E18,002 4 Inventory at 31 December 20x9 is valued at a cost of £49,451. Included in this figure are several items of inventory which had originally cost Chippendale £9,270, but which are to be included in the January sale priced at E7,110 5. Cash sales incdude E1,400 from the sale of Chippendales private car No entry has been made for part-time wages amounting to E3,650 paid drectly out of the shop takings (that is, before they were taken to the bank or recorded in the cash book). General expenses unpaid at 31 December 20X9 amounted to £4,470. These have not yet been accounted for 7.
8. General expenses in the trial balance include £408 of insurance costs relating to the next year, 20XO. 9. The shops bank statement shows an overdraft of E4,975; the difference of E1,544 represents bank interest charged on 31 December 2000 which has not yet been included in the books 10. The loan interest for 20x9 has not yet been paid 11. Motor vehicles are to be depreciated at 20 per cent of cost, and shop fittings at 10 per cent of net book value. Freehold property is not depreciated. Required Financial statements for Chippendales furniture shop for the year ended 31 December 20X9, consisting of income statement and statement of financial position, using the trial balance and the additional information supplied.
Chippendale is the owner of a retired and the acounts of the business were subsequenty kept by Chippendale furnidure shop U3TDEC His double-entry was accurate fi.e debits - credits) but he did not aysel which T accounts to use Chippendale produced the flwing trial balance at 31 Decemtet 20x9 Cr 22,035 12,000 Dr Capital Chippendale Drawings- Chippendale Loan at 15% interest per annum Freehold property Motor vehicles-cos Motor vehicles-accumulated depreciation Shop fittings-cost 22,600 17,500 20,800 16,300 32,832 4200 3,710 Shop fittings-accumulated depreciation Inventory at 31 December 20x8 Trade receivables at 31 December 20X8 Trade payables at 31 December 20x8 Purchases General expenses Wages Cash sales Credit sales Provision for doubtful debts at 31 December 20X8 7,817 14,712 185,298 37,146 42,183 254,451 32,870 367 3,431 Bank Cash 300 365,276 365,276 The following additional information is available: 1. When Chippendale acquired his present premises he also purchased an identical shop next door, the two shops each costing E55,000. During 20X9 the shop next door was sold for £127,500.Chippendale credited the full amount of the proceeds to te freehold property T' account 2. Chippendale did not know how to deal with receivables so he ignored them entirely The credit sales' account actually represents the cash received from customers during 20x9. By matching these receipts against the file of sales invoices, it appears that the amount due by customers at 31 December 20x9 is £14,898. Of this total, £832 represents bad debts and a further E437 is regarded as doubtful. 3. A similar situation existed with the payables. The 'purchases' account is actually the total amount paid to suppliers during 20x9, the total of unpaid invoices at 31 December 20X9 is E18,002 4 Inventory at 31 December 20x9 is valued at a cost of £49,451. Included in this figure are several items of inventory which had originally cost Chippendale £9,270, but which are to be included in the January sale priced at E7,110 5. Cash sales incdude E1,400 from the sale of Chippendale's private car No entry has been made for part-time wages amounting to E3,650 paid drectly out of the shop takings (that is, before they were taken to the bank or recorded in the cash book). General expenses unpaid at 31 December 20X9 amounted to £4,470. These have not yet been accounted for 7.
8. General expenses in the trial balance include £408 of insurance costs relating to the next year, 20XO. 9. The shop's bank statement shows an overdraft of E4,975; the difference of E1,544 represents bank interest charged on 31 December 2000 which has not yet been included in the books 10. The loan interest for 20x9 has not yet been paid 11. Motor vehicles are to be depreciated at 20 per cent of cost, and shop fittings at 10 per cent of net book value. Freehold property is not depreciated. Required Financial statements for Chippendale's furniture shop for the year ended 31 December 20X9, consisting of income statement and statement of financial position, using the trial balance and the additional information supplied.

Answers

Income Statement of Chippendale for the year ended 31st December 2009

Particulars Debit $ Particulars Credit $
Opening inventory 32832 Sales 254451
Purchases 188588 Closing inventory 47291
General Expenses(Net of prepaid insurance) 36738 Net Loss 17652
Wages 42183
Provision for bad debt 437
Bad debts 832
Reserve for inventory devaluation 2160
Part time wages 3650
Expense unpaid 4470
Interest expense Dec 2000 1544
Interest on [email protected]% 1800
Depreciation on motor vehicle 4160
319394 319394

Statement of Financial Position

Liabilities Amount $ Assets Amount $
Capital Chippendale 22035
Motor Vehicle - 20800
Less- Accumulated Dep -7870 12930
Loan 15% 12000
Shop Fittings - 16300
Payable 18002 Less- Accumulated Dep -5410 3810
Expense payable 4470
Interest on loan payable 1800 Receivable - (14898-832-437) 13629
Inventory = 49451
Less-Reserve for devaluation=2160 47291
Prepaid insurance 408
Cash 300
Bank overdraft -20061
58307 58307
.

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