Help - balance, and profit and loss sheets - Printable Version +- Accountancy Forum (https://www.accountancy.com.pk/forum) +-- Forum: The Profession (https://www.accountancy.com.pk/forum/forumdisplay.php?fid=4) +--- Forum: Students (https://www.accountancy.com.pk/forum/forumdisplay.php?fid=13) +--- Thread: Help - balance, and profit and loss sheets (/showthread.php?tid=6401)

Help - balance, and profit and loss sheets - RedBull - 08-18-2009 1. Prepare the Profit & Loss and the Balance Sheet for the year ending 2008 (30 marks) This is the trial balance for the financial year 1/1/2008 – 31/12/2008 for the XYZ firm. Dr Cr Bank 97300 Cash 34800 Capital 180500 Trade debtors 49000 Rates 700 Heat & Light 2300 Trade creditors 67000 Vehicle at cost 48000 Equipments at cost 50000 Drawings 15000 Accumulated depreciation - Vehicle 18000 - Equipments 20000 Stock (1/1/2008) 43800 Loan 80000 Loan Interest 4000 Purchases 230000 Wages 25100 Sales 234500 Provision for bad debts (1/1/08) 3400 Telephone 3400 603400 603400 NOTES - closing stock on 31/12/2008 was £15400 - £5000 of wages weren’t paid by the end of the year - expenses of £300 of heat and light are related to the following year - depreciation policy is as follows o vehicles 15% at cost o equipments 10% at cost - bad debts of £15000 are to be written off - provisions for bad debts are to be maintained at 10% This is what i need to do but i keep going horribly wrong, im new to this. Waynes Trading Profit and Loss account for the year to 31 March 2005 Sources of entry £ £ Rates 700 Sales 234500 Heat & Light 2300 Less Cost of goods sold Vehicle at cost 48000 Opening Stock 43800 Equipments at cost 50000 Purchases 23000 Telephone 3400 63800 Less Closing stock 15400 Office Expenses 104400 48400 Gross Profit 186100 Less expenses Insurance (2000-500) 1500 Office expenses 104400 Depreciation Office furniture (10 x5000) Bad Debt 15000 Increase in provision for bad and doubtful debts 3400 Salaries 25100 149400 Net Profit for the year 36700 This is my balance sheet, would be cool if you could highlight all of my errors thanks. - wsafca - 08-18-2009 I cannot solve this for you, but will give you some good tips that I hope will definitly help you now and in future as well.. Step 1 Check whether trial is tally.. If yes then no problem and most of the times it does. Step 2 Make four parts of the trial a) Income b) expenses c)Assets d) Liabilities Few items are counter assets (like accumulated depreciation) keep those at the side of liability. Step 3 Total the four parts individualy as you get income expenses, assets and liablities figures separatly. Step 4 Now put these figures in financial statements, keeping space for the adjusting entries. (After you put the figures in financials you will see the financial statements are tally at this stage.) Now you have to make the adjusting entries and always remember every adjustement would have two opposite effects as it is the theme of accounting. Example £5000 of wages weren’t paid by the end of the year. means outstanding. Debit Wages account 5,000 Credit Wages payable account 5,000 at one side it has decreased the liability side of balance sheet by debiting. ( increasing expense means decreasing profit means decreasing equity means decreasing liability side) and one side it increases the liablity side by crediting. So net effect remaining nill. Financials will be still tallied Do all adjustments in like manner. I hope this will work Regards Waqas - RedBull - 08-18-2009 Thanks waqas, was really helpful, Im sure il be back when i get confused again though.