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Chapter 12 Bad and doubtful debts Q1 David (a) Trading and Profit

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					Chapter 12 Bad and doubtful debts

Q1                                          David

     (a)   Trading and Profit and Loss Account for the year ended 31 March 2004
                                                       $           $              $
           Sales                                                              206 000
           less Sales returns                                                    9 240
                                                                              196 760
           Less cost of sales: Stock at 1 April 2003                4 000
                               Purchases               84 000
                               less Purchases returns    5 112
                                                       78 888
                               add Carriage inwards      1 840     80 728
                                                                   84 728
                               less Stock at 31 March 2004           8 000      76 728
           Gross profit                                                       120 032
           Add Discounts received                                                2 480
                                                                              122 512
           Less overheads
           Wages                                                   37 400
           Rent                                                      6 000
           Electricity                                               1 387
           Telephones                                                1 000
           Postage and stationery                                      359
           Carriage outwards                                         1 220
           Discounts allowed                                         6 015
           Bad debts written off                                     1 700
           Provision for doubtful debts                              2 850
           Depreciation: leasehold premises            3 500
                          delivery vans                3 600
                          office furniture                300       7 400       65 331
           Net profit                                                           57 181

     (b)                         Balance Sheet at 31 March 2004
                                                               Cost     Depn.       NBV
                                                                $         $          $
           Fixed assets
           Leasehold property                                  70 000    8 500      61 500
           Delivery vans                                       18 000    7 200      10 800
           Office furniture                                     3 000    1 800       1 200
                                                               91 000   17 500      73 500
           Current assets
           Stock                                                         8 000
           Trade debtors                                       14 100
           less Provision for doubtful debts                    3 650    10 450
           Prepaid rent                                                   1 600
           Bank                                                           1 245
                                                                         21 295
           Current liabilities
           Trade creditors                                      7 200
           Expense creditors                                      860     8 060      13 235
                                                                                     86 735
      Capital at 1 April 2003                                                  50 000
      Net profit                                                               57 181
                                                                              107 181
      Drawings                                                                 20 446
                                                                               86 735



Q2                                        Saul

(a)         Trading and Profit and Loss Account for the year ended 31 May 2004
                                                     $           $           $
            Sales                                                        700 000
            less Sales returns                                              6 670
                                                                         693 330
            less Cost of sales
            Stock at 1 June 2003                               40 000
            Purchases                            408 490
            less Purchases returns                  3 112
                                                 405 378
            add Carriage inwards                    4 240     409 618
                                                              449 618
            less Stock at 31 May 2004                          58 000    391 618
            Gross profit                                                 301 712
            Rent receivable                                                 1 300
            Discounts received                                              2 942
                                                                         305 954
            less Overheads
            Wages                                             137 652
            Rent payable                                         8 000
            Heating and lighting                                 5 120
            Telephone and postage                                3 217
            Stationery                                           5 965
            Repairs to machinery                                17 600
            Discounts allowed                                    3 220
            Carriage outwards                                    1 819
            Bad debts written off                                1 800
            Provision for doubtful debts                           440
            Depreciation: freehold property        7 200
                            plant and machinery   14 550
                            motor vehicles         4 200       25 950     210 783
            Net profit                                                     95 171
(b)                         Balance Sheet at 31 May 2004
                                                    Cost      Depn.     NBV
                                                      $          $        $
      Fixed assets
      Freehold property                            180 000     52 200   127 800
      Plant and machinery                           97 000     67 550    29 450
      Motor vehicles                                41 000     31 200     9 800
                                                   318 000    150 950   167 050
      Current assets
      Stock of goods                                 58 000
      Stock of stationery                               450    58 450
      Trade debtors                                  32 800
      less Provision for doubtful debts               1 640    31 160
      Prepayments and rent receivable                           2 280
      Bank                                                     11 374
                                                              103 264
      Current liabilities
      Trade creditors                                5 720
      Expense creditors                                620      6 340     96 924
                                                                         263 974

      Capital at 1 June 2003                                             200 000
      Profit                                                              95 171
                                                                         295 171
      Drawings                               Cash              28 797
                                             Goods              2 400     31197
                                                                         263 974

				
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Description: Chapter 12 Bad and doubtful debts Q1 David (a) Trading and Profit