Leaving Cert Accounting FINAL ACCOUNTS - Sole Trader: The following trial balance was

Question

The following trial balance was extracted from the books of S. Highway on 31/12/2019:

| Account                     | Amount (€)  |
|----------------------------|-------------|
| Land and buildings (cost €795,000) | €  |
| Delivery vans (cost €250,000)      | 186,000 |
| Equipment at cost               | 128,800  |
| Purchases and sales            | 1,080,000 | 1,867,000|
| VAT                        | 3,100    |
| PAYE, PRSI, USC              | 3,450    |
| Bank                       | 48,800   |
| Debtors and creditors        | 97,500   | 84,300    |
| Salaries and general expenses, (incorporating suspense) | 381,750  |
| Stock 01/01/2019            | 62,900   |
| Provision for bad debts      | 4,500    |
| Mortgage interest paid for first three months  | 8,400    |
| Advertising                  | 56,800   |
| Discount (net)              | 8,500    |
| Drawings                     | 50,000   |
| Investment interest received   | 2,500    |
| Capital                     | 750,000  |
| 6% Investments (01/07/2019)  | 250,000  |
| 8% Fixed mortgage (including €60,000 issued on 01/04/2019) | 300,000  |
| Total                       | 3,072,150 | 3,072,150 |

The following information and instructions are to be taken into account:

(i) Stock at cost on 31/12/2019 was €669,800. This figure includes water damaged stock which cost €10,600 but which now has a net realisable value of 15% of cost.

(ii) No record has been made in the books for goods in transit on 31/12/2019. The invoice for these goods was received showing the recommended retail price of €24,500, which is cost plus 25%.

(iii) Provide for depreciation on delivery vans at the annual rate of 20% per annum on cost from the date of purchase to the end of the year.  
NOTE: On 31/03/2019 a delivery van which had cost €48,000 on 31/10/2016 was traded in against a new van's transaction. An sales price of €26,000 was given on the old van.  
The figure for the net amount of this transaction was entered in the bank account but was incorrect with respect of a purchase of trading stock. These were the only entries made in the books in respect of this transaction.

(iv) A new warehouse was purchased during the year for €90,000 plus VAT @ 13.5%. The amount paid to the vendor was entered in the land and buildings account. No entry was made in the files.

(v) Buildings are to be depreciated at the rate of 2% per annum on cost (land at cost was €500,000). It was agreed to relieve the land and buildings at €900,000 on 31/12/2019.

(vi) The suspense figure arises as a result of the incorrect figure for mortgage interest (although the correctly rate has been entered in the bank account) and a VAT payment of €3,600 now entered in the bank account.

(vii) The figure for bank in the trial balance has been taken from the business bank account. However, a bank statement dated 31/12/2019 has arrived showing a chequed of €320. A comparison of the bank account and the bank statement has revealed the following discrepancies:

1. A credit transfer for €1,000 had been received on 31/12/2019 in respect of a debt of €1,500 previously written off as bad. The debtor has agreed to pay the remaining amount into the next statement within two months. Now entry was made in the books for this transaction.

2. A cheque for €16,500 issued to a supplier had been entered in the books (cash book and ledger) as €15,600.

3. A cheque for €2,050 issued to a supplier had been returned. This had not been entered in the books.

4. A cheque for advertising €14,200 has not been presented for payment.  
(Note: 2% of mortgage interest for the year is to be attributed to the private section of the building.)

(viii) Provide for bad debts to be adjusted to 4% of debtors.

Required:
(a) Prepare the trading profit and loss account of S. Highway for the year ended 31/12/2019.  
(b) Prepare the balance sheet of S. Highway as at 31/12/2019.

Description	Cost (€)	Accumulated Depreciation (€)	Net Book Value (€)
Tangible Fixed Assets
Land and Buildings	900,000	117,150	782,850
Delivery Vans	266,000	93,200	172,800
Equipment	128,800	-	128,800
Total Fixed Assets	1,294,800	210,350	1,084,450

The following trial balance was extracted from the books of S - Leaving Cert Accounting - Question 1 - 2020

Worked Solution & Example Answer:The following trial balance was extracted from the books of S - Leaving Cert Accounting - Question 1 - 2020

Prepare the balance sheet of S. Highway as at 31/12/2019

Balance Sheet of S. Highway

Financial Assets

Current Assets

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