ACC 1101: INRODUCTION TO ACCOUNTING I

Assignment Three

The following trial balance was extracted from the books of Rose Martins, a sole trader on 31
December 2021

  Sh Sh
Capital   6,880,000
Freehold land and buildings at cost 1,120,000  
Motor vehicles at cost 1,094,000  
Furniture and fittings at cost 240,000  
Stock at 1 January 2021 960,000  
Purchases and sales 9,408,000 7,238,000
Debtors and creditors 936,000 695,200
Discounts allowed and received 195,200 119,200
Returns inwards and outwards 16,000 28,800
Rent received   44,000
Loan (interest payable 5% per annum)   192,000
Interest on loan 4,800  
Provision for doubtful debts   27,200
Bad debts 52,000  
Wages and salaries 1,127,200  
Drawings 256,000  
General expenses 138,400  
Bank balance 108,800  
Rates and insurance 48,000  
Provisions for depreciation:    
Furniture and fittings   160,000
Motor vehicle   320,000
  15,704,400 15,704,400
Additional Information
1. Stock at 31 December 2021 was valued at Sh. 1,360,000.
2. Included in general expenses is a sum of Sh. 26,400 being expenses on electricity for
domestic use.
3. As at 31 December 2021, wages and salaries outstanding amounted to Sh. 66,400.
4. Prepaid rates and insurance as at 31 December 2021 stood at Sh. 12,000.
5. Interest paid is only a half of the amount due for the year ended 31 December 2021
6. Provision for doubtful debts is to be adjusted to 5% of the debtors.
7. Depreciation is to be provided for as follows:
(i) Furniture and fittings at 5% on reducing balance method
(ii) Motor vehicles at 20% on straight line method.
8. Rent owing from a tenant who occupies a part of the building was Sh. 40,000 on 31
December 2021

Required:
a) Statement of Profit or loss for the year ended 31 December 2021
b) Statement of financial position as at 31 December 2021