The following list of balances is from the ledger of Mrs. Graver a sole proprietor as at April 30, 2020.

Purchases $61,420

Sales $127,245

Stock May 1, 2017 $7,940

Capital May 1, 2017 $25,200

Bank overdraft $2,490

Cash $140

Discount Allowed $2,480

Discount Received $62

Returns inwards $3,486

Returns outwards $1,356

Carriage outwards $3,210

Rent and insurance $8,870

Provision for doubtful debts $630

Fixtures and fittings $1,900

Van $5,600

Debtors $12,418

Creditors $11,400

Drawings $21,400

Wages and salaries $39,200

General office expenses $319

You are required to:

Prepare a trial balance from the information provided (5 marks)

Using the following additional information:

Stock April 30, 2018 $6,805.

Wages and salaries accrued at April 30, 2018 $3,500; Office expenses owing $16.

Rent prepaid April 30, 2018 $600.

Increase the provision for doubtful debts by $110.

Provide for depreciation as follows: Fixtures and fittings $190; Van $1,400.

Prepare an Income Statement for Mrs. Graver for the year ended April 30, 2018

(20 marks)

Prepare the statement of financial position as at April 30, 2018 (20 marks)

Explain the importance of Income Statement and Statement of Financial position to Mrs. Graver. Also, from the information gathered from the Income Statement and Statement of Financial position provide Mrs. Graver with an analysis of his business performance.

(5 marks)

Question Two

The following list of balances is from the ledger of Mr. Carty as at February 28, 2018.

Carriage Outwards $4,562

Drawings $18,440

Carriage Inwards $11,830

Discount Allowed $2,306

Discount Received $1,750

Purchases $135,680

Return Inwards $5,624

Rents, rates & insurance $25,973

Heating & Lighting $11,010

Postage, stationery & telephone $2,410

Debtor $ 24,500

Fixtures & Fittings- at cost $120,740

Provision for depreciation on fixtures & fittings- as at Feb. 28, 2018 $63,020

Depreciation $12,074

Advertising $5,980

Salaries & wages $38,521

Bad debt $2,008

Cash $534

Return Outwards $13,407

Provision for doubtful debt $512

Bank $4,440

Capital $83,887

Sales $259,870

Creditor $19,840

Stock as at March 1, 2017 $15,654

You are required to:

Prepare a trial balance from the information provided (5 marks)

Using the following additional information:

Stock at the close of business was valued at $17,750

Insurances have been prepaid by $1,120

Heating and lighting is accrued by $1,360

The provision for doubtful debt is to be adjusted so that it is 3% of debtors

Prepaid rates $5,435

Prepare an Income Statement for Mr. Carty for the year ended Feb. 28, 2018

(20 marks)

Prepare the statement of financial position as at Feb. 28, 2018 (20 marks)

Explain the importance of Income Statement and Statement of Financial position to Mr. Carty. Also, from the information gathered from the Income Statement and Statement of Financial position provide Mr. Carty with an analysis of his business performance.

(5 marks