Author: Kito

Application of adjustments in the Profit and loss and the balance sheet
J. Forsythe has been trading for some years as a car salesman. The following list of balances has been extracted from his ledger as at 30 April 2007, the end of his most recent financial year.
$
Capital 83,887
Sales 259,870
Trade Creditors 19,840
Returns Out 13,407
Provisions for bad debts 512
Discounts Allowed 2,306
Discount Received 1,750
Purchases 135,680
Returns Inwards 5,624
Rent, rates and insurance 25973
Carriage Inwards 11,830
Drawings 18,440
Carriage Outwards 4,562
Heating & Lighting 11,010
Postage Stationery & Telephone 2,410
Advertising 5,980
Salaries & Wages 38,521
Bad debts 2,008
Cash in hand 534
Cash at bank 4,440
Stock as at the 1 May 2006 15,654
Trade Debtors 24,500
Fixtures and Fittings at Cost 120,740
Provision for depreciation on fixtures and fittings as at 30 April 2007 63,020
Depreciation 12,074
The following additional information as at April 30, 2007 is available:
Stock at the close of business was valued at $17750
Insurance have been prepaid by $1,120
Heating and lighting is accrued by $1,360
Rates have been prepaid by $5,435
The provision for bad debts is to be adjusted so that it is 3% of trade debtors.
Required:
Prepare Mr. Forsythe’s trading and profit and loss account for the year ended 30 April 2007 and a balance sheet as at that date.