QUESTION 2 Joe Durango prepared the following trial balance from the accounting records of his firm, Dango Traders. Durango Traders Trial Balance As at 31.7.2019 Dr.(Kshs) Cr.(Kshs) Sales 675,000 Sales Returns and Allowances 2,250 Purchases 436,500 Purchases Returns and Allowances 3,150 Freight-in 11,700 Advertisement 2,250 Salaries 52,200 Administrative Expenses 3,150 Stationery and Printing 4,050 Office Equipment at Cost 27,000 Accumulated Depreciation: Office Equipment 10,125 Capital: J.Durango 1/8/2018 49,480 Drawings: J.Durango 45,000 Cash 78,235 Trade Debtors 10,350 Trading Inventory 1/8/2018 70,650 Prepaid Insurance 1,620 Prepaid Rentals 10,800 Trade Creditors 18,000 Total 755,755 755,755 Additional Information i. The enterprise took out a fire insurance policy on 1 st April, 2019 and paid a premium of Kshs. 1,620 for the 12 months to 31 st March, 2020. ii. On 1 st February 2019, Durango Traders entered into a rental contract and paid a year’s rental Kshs. 10,800 in advance iii. Depreciation of Kshs. 3,375 must still be provided for the year ended 31 st July 2019 on office furniture iv. On 31 st July 2019, the trading inventory amounted to Kshs. 59,400 (at cost price) REQUIRED:- a) Prepare the necessary journal entries to give effect to the adjustment at the year end. b) Prepare the Income Statement for the enterprise for the year ended 31 st July, 2019 c) Prepare a balance sheet of the business at 31 st July 2019
QUESTION 2
Joe Durango prepared the following
Traders.
Durango Traders
Trial Balance
As at 31.7.2019
Dr.(Kshs) Cr.(Kshs)
Sales 675,000
Sales Returns and Allowances 2,250
Purchases 436,500
Purchases Returns and Allowances 3,150
Freight-in 11,700
Advertisement 2,250
Salaries 52,200
Administrative Expenses 3,150
Stationery and Printing 4,050
Office Equipment at Cost 27,000
Accumulated
Equipment
10,125
Capital: J.Durango 1/8/2018 49,480
Drawings: J.Durango 45,000
Cash 78,235
Trade Debtors 10,350
Trading Inventory 1/8/2018 70,650
Prepaid Insurance 1,620
Prepaid Rentals 10,800
Trade Creditors 18,000
Total 755,755 755,755
Additional Information
i. The enterprise took out a fire insurance policy on 1 st April, 2019 and paid a premium of Kshs.
1,620 for the 12 months to 31 st March, 2020.
ii. On 1 st February 2019, Durango Traders entered into a rental contract and paid a year’s rental
Kshs. 10,800 in advance
iii. Depreciation of Kshs. 3,375 must still be provided for the year ended 31 st July 2019 on office
furniture
iv. On 31 st July 2019, the trading inventory amounted to Kshs. 59,400 (at cost price)
REQUIRED:-
a) Prepare the necessary
b) Prepare the Income Statement for the enterprise for the year ended 31 st July, 2019
c) Prepare a
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