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FS Part A Worksheet
FS Part A Worksheet
Worksheet
The following trial balance was extracted from the books of John at 31 May 2023.
John
Trial Balance at 31 May 2023
Write Dr Cr
DR/CR $ $
1
Notes
1. The inventory at 31 May 2023 was valued at $7000
2. During the year ended 31 may 20-8, Samir took goods costing $200 for his own use. No
entries have been made in the account records.
Income statement
Using the trial balance and accompanying notes shown above prepare the trading account
section of the income statement of John for the year ended 31 May 2023.
John
Income Statement (Trading Account Section) for the year ended 31 May 2023
$ $ $
Revenue (Sales) 85000
Less Sales returns 950 84050
Less Cost of Sales
Opening Inventory 6800
Purchases 55000
Less Purchases returns __400
54600
Less Goods for own use __200
54400
Carriage inwards _1 800 56200
63000
Less Closing inventory _7000 56000
Gross profit 28050
2
Use horizontal format
John
Income Statement (Trading Account Section) for the year ended 31 May 2023
$ $ $ $
Opening inventory 6800 Revenue (Sales) 85000
Purchases 55 000 Less Sales returns 950 84050
Less Purchases returns __400
54600
Less Goods for own use __200
54400
Carriage inwards _1 800 56200
63000
Less Closing inventory 7 000
Cost of sales 56000
Gross profit c/d 28050 _____
84050 84050
Using the trial balance and accompanying notes shown in Example above, prepare the profit
and loss account section for the income statement of John for the year ended 31 May 2023.
$ $ $
Gross profit 28050
Add : Discount received __300
28350
Less Discount allowed 950
Wages 10000
General expenses 4000
Property tax 700
Loan interest __400 16 050
Profit for the year (net profit) 12 300
3
Use horizontal format
Samir
Income Statement (Profit and Loss Account Section)
for the year ended 31 May 20-8
$ $ $ $
Opening inventory 6 800 Revenue (Sales) 85 000
Purchases 55 000 Less Sales returns 950 84 050
Less Purchases returns __400
54 600
Less Goods for own use __200
54 400
Carriage inwards _1 800 56 200
63 000
Less Closing inventory 7 000
Cost of sales 56 000
Gross profit c/d 28 050 _____
84 050 84 050
4
Using either the trial balance and accompanying notes shown above or the separate sections of
the income statement prepared above prepared the income statement of John for the year
ended 31 May 2023.
John
Income Statement (Trading Account Section) for the year ended 31 May 2023
$ $ $
Revenue (Sales) 85 000
Less Sales returns 950 84 050
Less Cost of Sales
Opening Inventory 6 800
Purchases 55 000
Less Purchases returns __400
54 600
Less Goods for own use __200
54 400
Carriage inwards _1 800 56 200
63 000
Less Closing inventory _7 000 56 000
Gross profit 28 050
Add Discount received __300
28 350
Less Discount allowed 950
Wages 10 000
General expenses 4 000
Property tax 700
Loan interest __400 16 050
Profit for the year (net profit) 12 300
*the profit for the year is often used in place “Net Profit”
5
How to Transfer Ledger Account Totals to the Income Statement
● Anything appearing in the income statement must have a double entry in another account
● Anything credited to the income statement must be debited in the appropriate ledger
account
● Anything debited to the income statement must be credited in the appropriate ledger
account
● When something is deducted from a debit item in the income statement this is equal to a
credit entry
o So a debit entry is required in the ledger
● When something is deducted from a credit item in the income statement this is equal to a
debit entry
o So a credit entry is required in the ledger
Example 8.6
Using the income statement prepared for Sami in the previous example, prepare the following
ledger accounts to show how each is closed by transfer to the income statement:
a) Purchases account
b) Purchases return account
c) Discount received account
d) Wages account
Samir
Nominal Ledger
Purchases account
6
Purchases returns account
Date Details $ Date Details $
20-8 20-8
May 31 Income statement 500 May 31 Total to date 500
___ ___
500 500
Wages account
Date Details $ Date Details $
20-8 20-8
May 31 Total to date 11 200 May 31 Income statement 11 200
_____ _____
11 200 11 200
7
Example 8.7
Using the income statement prepared for Samir in a previous example, prepare the inventory
account in Samir’s ledger on 31 May 20-8
Samir
Nominal Ledger
Inventory Account
Example 8.8
On 1 June 20-7 the credit balance on Samir’s capital account was $90 000. For the year
ended 31 May 20-8 his drawings were $9000 and his profit for the year was $13 900.
Prepare the capital account and the drawings account in Samir’s ledger on 31 May 20-8
Samir
Nominal Ledger
Capital Account
8
Drawings Account
Example 8.9
Anita is a business consultant. She provided the following information at the end of her financial
year on 30 September 20-5.
$
Property tax 6 400
General expenses 8 950
Insurance 2 670
Printing and stationery 4 560
Loan interest 1 500
Wages 43 500
Rent received 7 300
Commissions received 92 150
(b) Prepare the income statement for Anita for the year ended 30 September 20-5. Use the
vertical formation
9
Anita
Income Statement for the year ended 30 September 20-5
$ $
Commissions received 92 150
Add Rent received 7 300
99 450
Less Property tax 6 400
General expenses 8 950
Insurance 2 670
Printing and stationery 4 560
Loan interest 1 500
Wages 43 500 67 580
Profit for the year 31 870
10