Question eleven: Mr. Amani has been working as a retail trader and his wife was the one who keeps the books of account. Of recent, they decided to hire an accountant. The Financial Statement for the period ended 31st December 2016 and the books of account were handed over to this new accountant. The profit or loss account showed a net profit of TZS.15,667,000. On reviewing the books and the Statement of Profit or Loss, the accountant discovered the following: (i) Drawings of TZS.2,200,000 were included as miscellaneous expenses (ii) Rent expenses included rate for the half year ending 31st May 2017 of TZS.750,000 (iii) Motor van expenses do not include a repair carried out in December 2016 but not yet invoiced. It is expected to cost TZS.258,000 (iv) Stationery purchases of TZS.780,000 were expensed but did not take into consideration stationery stocks at 31st December 2015 of TZS.105,000 and at 31st December 2016 of TZS.143,000 (v) Debtors amounted to TZS.3,450,000 but 10% of them seems to be uncollectible. No provision was made in the books. received (vi) Discounts TZS.650,000 respectively. No entry was made in the books. Required: (a) Prepare journal entries necessary to correct the above errors. (b) Prepare a statement that adjust the net profit figure to reflect the correct allowed and amounted to TZS.350,000 and amount.
Question eleven: Mr. Amani has been working as a retail trader and his wife was the one who keeps the books of account. Of recent, they decided to hire an accountant. The Financial Statement for the period ended 31st December 2016 and the books of account were handed over to this new accountant. The profit or loss account showed a net profit of TZS.15,667,000. On reviewing the books and the Statement of Profit or Loss, the accountant discovered the following: (i) Drawings of TZS.2,200,000 were included as miscellaneous expenses (ii) Rent expenses included rate for the half year ending 31st May 2017 of TZS.750,000 (iii) Motor van expenses do not include a repair carried out in December 2016 but not yet invoiced. It is expected to cost TZS.258,000 (iv) Stationery purchases of TZS.780,000 were expensed but did not take into consideration stationery stocks at 31st December 2015 of TZS.105,000 and at 31st December 2016 of TZS.143,000 (v) Debtors amounted to TZS.3,450,000 but 10% of them seems to be uncollectible. No provision was made in the books. received (vi) Discounts TZS.650,000 respectively. No entry was made in the books. Required: (a) Prepare journal entries necessary to correct the above errors. (b) Prepare a statement that adjust the net profit figure to reflect the correct allowed and amounted to TZS.350,000 and amount.
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter3: The Basics Of Record Keeping And Financial Statement Preparation: Income Statement
Section: Chapter Questions
Problem 26P
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Transcribed Image Text:Question eleven:
Mr. Amani has been working as a retail trader and his wife was the one who
keeps the books of account. Of recent, they decided to hire an accountant. The
Financial Statement for the period ended 31st December 2016 and the books of
account were handed over to this new accountant. The profit or loss account
showed a net profit of TZS.15,667,000. On reviewing the books and the
Statement of Profit or Loss, the accountant discovered the following:
(i) Drawings of TZS.2,200,000 were included as miscellaneous expenses
(ii) Rent expenses included rate for the half year ending 31st May 2017 of
TZS.750,000
(iii) Motor van expenses do not include a repair carried out in December 2016
but not yet invoiced. It is expected to cost TZS.258,000
(iv) Stationery purchases of TZS.780,000 were expensed but did not take into
consideration stationery stocks at 31st December 2015 of TZS.105,000 and at
31st December 2016 of TZS.143,000
(v) Debtors amounted to TZS.3,450,000 but 10% of them seems to be
uncollectible. No provision was made in the books.
received
(vi) Discounts
TZS.650,000 respectively. No entry was made in the books.
Required: (a) Prepare journal entries necessary to correct the above errors.
(b) Prepare a statement that adjust the net profit figure to reflect the correct
allowed
and
amounted
to
TZS.350,000 and
amount.
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