PatMart Co. Ltd is a new business that started trading on 1 January 2019. The following is a summary of transactions that occurred during the first year of trading: The owners introduced GH¢50,000 of capital, which was paid into a bank account opened in the name of the business. Premises were rented from 1 January 2019 at an annual rental of GH¢20,000. During the year, rent of GH¢25,000 was paid to the owner of the premises. Rates (a tax on business premises) were paid during the year as follows: For the period 1 January 2019 to 31 March 2019 GH¢500 For the period 1 April 2019 to 31 March 2020 GH¢1,200 A delivery van was bought on 1 January 2019 for GH¢12,000. This is expected to be used in the business for four years and then to be sold for GH¢2,000. Wages totaling GH¢33,500 were paid during the year. At the end of the year, the business owed GH¢630 of wages for the last week of the year. Electricity bills for the first three quarters of the year were paid totaling GH¢1,650. After 31 December 2019, but before the financial statements had been finalized for the year, the bill for the last quarter arrived showing a charge of GH¢620. Inventories totaling GH¢143,000 were bought on credit. Inventories totaling GH¢12,000 were bought for cash. Sales revenue on credit totaled GH¢152,000 (cost of sales GH¢74,000). Cash sales revenue totaled GH¢35,000 (cost of sales GH¢16,000). Receipts from trade receivables totaled GH¢132,000. Payments to trade payables totaled GH¢121,000. Van running expenses paid totaled GH¢9,400. At the end of the year it was clear that a trade receivables who owed GH¢400 would not be able to pay any part of the debt. The business uses the straight-line method for depreciating non-current assets. Required: Prepare a Statement of Financial Position as at 31 December 2019 and an Income Statement for the year to that date.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 9PA: Mohammed LLC is a growing consulting firm. The following transactions take place during the current...

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PatMart Co. Ltd is a new business that started trading on 1 January 2019. The following is a summary of transactions that occurred during the first year of trading:

The owners introduced GH¢50,000 of capital, which was paid into a bank account opened in the name of the business.
Premises were rented from 1 January 2019 at an annual rental of GH¢20,000. During the year, rent of GH¢25,000 was paid to the owner of the premises.
Rates (a tax on business premises) were paid during the year as follows:

For the period 1 January 2019 to 31 March 2019 GH¢500

For the period 1 April 2019 to 31 March 2020 GH¢1,200

A delivery van was bought on 1 January 2019 for GH¢12,000. This is expected to be used in the business for four years and then to be sold for GH¢2,000.
Wages totaling GH¢33,500 were paid during the year. At the end of the year, the business owed GH¢630 of wages for the last week of the year.
Electricity bills for the first three quarters of the year were paid totaling GH¢1,650. After 31 December 2019, but before the financial statements had been finalized for the year, the bill for the last quarter arrived showing a charge of GH¢620.
Inventories totaling GH¢143,000 were bought on credit.

Inventories totaling GH¢12,000 were bought for cash.

Sales revenue on credit totaled GH¢152,000 (cost of sales GH¢74,000).
Cash sales revenue totaled GH¢35,000 (cost of sales GH¢16,000).
Receipts from trade receivables totaled GH¢132,000.
Payments to trade payables totaled GH¢121,000.

Van running expenses paid totaled GH¢9,400.

At the end of the year it was clear that a trade receivables who owed GH¢400 would not be able to pay any part of the debt. The business uses the straight-line method for depreciating non-current assets.

Required:

Prepare a Statement of Financial Position as at 31 December 2019 and an Income Statement for the year to that date.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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