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Question 3-FS

Mr. Zambezi operates a wine merchant business. The balances in his ledger as of April 30, 2007 are provided along with additional information regarding bad debts, inventory, prepaid expenses, accrued expenses, and the provision for bad debts. Journal entries are required to record adjustments, as well as statements of profit or loss and financial position.

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Rax-Nguajandja Kapuire
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38 views1 page

Question 3-FS

Mr. Zambezi operates a wine merchant business. The balances in his ledger as of April 30, 2007 are provided along with additional information regarding bad debts, inventory, prepaid expenses, accrued expenses, and the provision for bad debts. Journal entries are required to record adjustments, as well as statements of profit or loss and financial position.

Uploaded by

Rax-Nguajandja Kapuire
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
Download as docx, pdf, or txt
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Question 2

Mr Zambezi has been trading for some years as a wine merchant. The following list of
balances has been extracted from his ledger as at 30 April 2007, the end of his most recent
financial year.
N$
Bad debts recovered 900
Capital 83 887
Sales 259 870
Trade Creditors 19 840
Returns out 13 407
Provision for bad debts 512
Discount allowed 2 306
Discount received 1 750
Purchases 135 680
Returns inwards 5 624
Carriage outwards 4 562
Drawings 18 440
Carriage inwards 11 830
Rent, rates and insurance 25 973
Heating and Lighting 11 010
Postage, stationery and telephone 2 410
Advertising 5 980
Salaries and wages 38 521
Bad debts 2 008
Cash in hand 1 434
Cash in bank 4 440
Inventory as at 1 May 2006 15 654
Trade Debtors 24 500
Fixtures and Fittings – at cost 120 740
Accumulated depreciation on fixtures and fittings – 30 April 2007 63 020
Depreciation 12 074

The following additional information as at 30 April 2007 is available:

a) Additional bad debts to be written off N$ 500.


b) Inventory at the close of business was valued at N$ 17 750.
c) Insurances have been prepaid by N$1 120
d) Heating and lighting is accrued by N$1 360
e) Rates have been prepaid by N$5 435
f) The provision for bad debts is to be adjusted so that it is 3% of trade debtors.

Required:

2.1 Prepare journal entries for adjustments. Narrations are not required. (12
marks)
2.2 Prepare a Statement of profit or loss (Show workings separately). (19 marks)
2.3 Prepare a Statement of financial position (19 marks)

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