2020 JYSS 3E POA EOY P2 Q1

1 The following balances were extracted from the books of Zaman Traders on 31 July 2020.

	$
Equipment	196 000
Motor vehicles	84 000
Accumulated depreciation
Equipment	68 000
Motor vehicles	32 000
Sales revenue	325 000
Sales returns	2 400
Cost of sales	94 300
Salaries and wages	78 960
Rental expense	5 600
General expenses	39 700
Interest income	1 000
Trade receivables	18 500
Trade payables	13 480
Bank loan(repayable in 5 years)	14 300
Cash in bank	15 600
Capital	126 280
Drawings	45 000

Additional information

1. General expenses $350 was prepaid.

2. Rental of $560 were owing.

3. Interest income earned per annum is $1 500.

4. Depreciation per annum is to be charged as follows :

Equipment, 20% using reducing balance method

Motor vehicles, 25% using straight line method.

5. Transferred $2 000 cash from the bank to the office.

REQUIRED

a. Prepare the statement of financial performance for the year ended 31 July 2020.

[12]

b. Prepare the statement of financial position as at 31 July 2020.

[12]

c. What is the effect of not adjusting , income received in advance, on

[2]

i. gross profit

ii. liabilities

[TOTAL 24]

SOLUTION

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(i) no effect on GP

( ii ) Liabilities is understated

2020 JYSS 3E POA EOY P2 Q1

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