2020 NAS 3E POA EOY P1 Q1
1 Strawberry Shortcake provided the following information on her trading business as at 31 March 2020.
$ | |
Capital, 1 April 2019 | ??? |
Cash at bank | 11 240 |
Loan from Cherry Finance | 20 000 |
147 500 | |
1 970 | |
82 600 | |
19 200 | |
Equipment | 34 800 |
Repairs and maintenance | 375 |
Salaries and wages | 22 700 |
Trade payables | 7 400 |
Trade receivables | 12 135 |
Upon checking, it was discovered that the following transactions were not recorded:
1. Invoice received for purchase of display shelves costing $780.
2. Cheque payment of $4 350 to Huckleberry Pie in full settlement of a $4 500 debt.
3. Credit sales amounting to $1 840. The goods cost $1 230.
REQUIRED
a. Explain the difference between a trading business and a service business.
[1]
b. Give one reason why Strawberry Shortcake needs to prepare a trial balance.
[1]
c. Prepare Strawberry Shortcake’s adjusted trial balance on 31 March 2020, after taking into account the missing transactions and showing clearly the balance in the capital account. All calculations must be clearly shown adjacent to the affected items
[11]
[TOTAL 13]
A trading business makes profits by buying and selling goods to customers while a service business makes profits by providing services to customers.