5.1. Sole traders
A subsection of Accounting, 7707, through 5. Preparation of financial statements
Listing 10 of 44 questions
Fatima is a sole trader. She prepares her financial statements to the end of March each year. At 31 March 2022, Fatima’s ledger account balances included the following. $ Revenue 79 400 Sales returns 3 970 Purchases 36 500 Rent and rates 9 000 Wages 10 100 General expenses 1 287 Insurance 1 800 Discount received 1 095 Inventory at 1 April 2021 3 000 Fixtures and equipment at cost 80 000 Fixtures and equipment – provision for depreciation 39 040 Trade receivables 6 400 Trade payables 4 995 Provision for doubtful debts Cash drawings 8 580 Capital at 1 April 2021 59 000 The following information is also available. Inventory at 31 March 2022 was $3120. Fatima took goods for her own use from the business during the year ended 31 March 2022. These goods cost $1300. Depreciation on fixtures and equipment is to be charged at 20% per annum using the reducing balance method. Accrued wages at 31 March 2022 were $800. Rent includes a payment of $1500 for the 3 months from 1 March 2022 to 31 May 2022. An irrecoverable trade receivable of $200 is to be written off. The provision for doubtful debts is to be set at 3% of trade receivables. REQUIRED Prepare Fatima’s income statement for the year ended 31 March 2022. Fatima Income Statement for the year ended 31 March 2022 $ $ Prepare Fatima’s capital account for the year ended 31 March 2022. Balance the account and bring down the balance on 1 April 2022. Fatima Capital account Date Details $ Date Details $ Fatima would like to expand the business. She thinks that additional finance of $20 000 would be required for the equipment which she would need. Fatima’s bank have offered to lend her $20 000, to be repaid after four years at interest of 6% per annum. REQUIRED Advise Fatima whether or not to agree to the bank loan. Justify your answer.
7707_s22_qp_21
THEORY
2022
Paper 2, Variant 1
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Questions Discovered
44