John Works as a distribution agent in DRC for diamond floor tiles. Under an agreement with manufacturers, he purchases the tiles and received a commission of 1% on purchases for the year ended on the previous 31st March in May. For several years, he has been obtaining a gross profit of 40% on all the sales. In a burglary which occurred in January 2001, he lost stock costing shs 4 million as well as most of his accounting records. However after careful investigations, the following information was obtained covering the year to 31st March 2001. a) Assets and liabilities as at 1st April 2000 Shs’000 Buildings at cost 10,000 Provision for Depreciation (buildings) 6,000 Motor vehicles at cost 5,000 Provision for depreciation (vehicles) 2,000 Inventory at cost 3,200 Trade receivables 6,300 Agency commission receivable 300 Trade expenses prepaid 120 Bank balance 4,310 Trade payables 4,200 Accrued vehicle expenses 230 John was notified that he will receive an agency commission of shs 440,000 on May 2001. Inventory at cost on 31st March 2001 was valued at as amount shs 3,000,000 more than that previous year. In October 2000, Inventory costing shs.1, 000,000 was damaged by dampness and had to be scrapped as worthless. Trade payables on 31st March 2001, related entirely to goods received amounting to shs 7,600,000. A discount allowed was shs 1,620,000 and discounts received was shs 1,200,000. Trade receivables on 31st March 2001 amounted to shs 80,000. Vehicle expenses prepaid at 31st March 2001 amounted to shs 7,020,000 All receipts were passed through the bank account. Depreciation was provided annually at the following rates: Buildings at 5% on cost. Motor vehicles at 20% on cost. Commission received was paid directly to the bank account. In addition to the payments for purchases, other bank payments were:- Vehicle expenses shs 6,720,000 Drawings shs 4,300,000 Trade expenses 7,360,000 John was not insured against loss of stock All sales and purchases were on credit basis. Required: Prepare John’s income statement for the year ended 31st March 2001
John Works as a distribution agent in DRC for diamond floor tiles. Under an agreement with manufacturers, he purchases the tiles and received a commission of 1% on purchases for the year ended on the previous 31st March in May. For several years, he has been obtaining a gross profit of 40% on all the sales. In a burglary which occurred in January 2001, he lost stock costing shs 4 million as well as most of his accounting records. However after careful investigations, the following information was obtained covering the year to 31st March 2001.
a)
Assets and liabilities as at 1st April 2000
Shs’000
Buildings at cost 10,000
Provision for
Motor vehicles at cost 5,000
Provision for depreciation (vehicles) 2,000
Inventory at cost 3,200
Trade receivables 6,300
Agency commission receivable 300
Trade expenses prepaid 120
Bank balance 4,310
Trade payables 4,200
Accrued vehicle expenses 230
John was notified that he will receive an agency commission of shs 440,000 on May 2001.
Inventory at cost on 31st March 2001 was valued at as amount shs 3,000,000 more than that previous year.
In October 2000, Inventory costing shs.1, 000,000 was damaged by dampness and had to be scrapped as worthless.
Trade payables on 31st March 2001, related entirely to goods received amounting to shs 7,600,000.
A discount allowed was shs 1,620,000 and discounts received was shs 1,200,000.
Trade receivables on 31st March 2001 amounted to shs 80,000.
Vehicle expenses prepaid at 31st March 2001 amounted to shs 7,020,000
All receipts were passed through the bank account.
Depreciation was provided annually at the following rates:
Buildings at 5% on cost.
Motor vehicles at 20% on cost.
Commission received was paid directly to the bank account.
In addition to the payments for purchases, other bank payments were:-
Vehicle expenses shs 6,720,000
Drawings shs 4,300,000
Trade expenses 7,360,000
John was not insured against loss of stock
All sales and purchases were on credit basis.
Required:
Prepare John’s income statement for the year ended 31st March 2001 and the balance sheet as at that date;
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