INCOME STATEMENT FOR ERNIE $ SALES Receipt from customer Refund to customer Amount due from customers Balance

b/f (recievables) COST OF GOOD SOLD Opening inventory Purchases Balance b/f Payments Payables c/f (suppliers at as 31 Mar.2008) Closing inventory (Inventory at as 31 Mar.) WAGES: Repair staff ENPENSES Rent 20% increase Less 3 months paid in advance Plus prepayment b/f Insurance Electricity Telephone Wages: His wife Depreciation Plant & Equipment Motor vehicle Total depreciation expense Loan interest Bad debts Profit on sale of vehicle Proceeds Less net book value Miscellaneous expense NET PROFIT

$ 203,520 -400 10,860 9,490 14,160 84,620

$ 204,490

-3,460 83,990 4,090 -12,170 -86,610 -68,200 3,450 3,600 -900 750 1,500 930 890 5,000 -3,800 -1,600 5,400 250 1,280 -500 3,000 2,500 1,770 -19,970 29,710

970

depreciation of plant & equipment + depreciation of motor vehicle

BALANCE SHEET FOR ERNIE $ FIXED ASSETS Plan & equip. Motor Vehicle CURRENT ASSETS Inventory Receivable Prepayments 6 months insurance paid in advance 3 months rent paid in advance Cash in hand Total asset CAPITAL Capital as at 1 July 2007 (sum of opening balances) Cost of plant & equipment Depreciation for plant & equipment Cost of motor vehicle Depreciation for vehicle Inventory as at 31 Mar.2007 Receivables as at 31 Mar.2007 Rent of premises paid in advance to 30 Sep. Insurance paid in advance Bank balance cash in hand Payables for supplies Telephone bill Electricity bill Profit for the year Drawings Long-term liabilities Loan Current liabilities Payables Acrruals 3-month loan interest Telephone Electricity Micellaneous expenses Salary for his wife $ 11,400 11,200 22,600 12,170 9,580 800 900 1,700 890 24,340 46,940 $

12,600 -5,800 9,000 -6,500 14,160 9,490 750 700 1,860 230 -3,460 -210 -180 32,640 29,710 62,350 -37,800 24,550 10,000 4,090 250 240 220 490 5,000 6,200

Overdraft Total capital and liabilities

2,100 12,390 46,940

Assets = liabilities + Capital 46940=(10000+12390)+24550

Sales x 40% = Net profit closing balance b/f 9500 - (9500x20%) =7600

BALANCE SHEET AS AT 31 MARCH 2009 $ ASSET Fixed assets Building: Cost 10,000 Depreciation 6,000 Net book value Vehicles: Cost 5,000 Depreciation 2,000 Net book value Current asset Inventory 3,200 Receivables 6,300 Commission due 300 Prepayments 120 Cash balance at bank 4,310 Total assets CAPITAL AND LIABILITIES Ernie's capital Net book value for buildings Net book value for vehicle Inventory Receivables for propriotorship Commission Current liabilities Trade payables Accrued expenses

4,000

net book value

3,000

14,230 21,230

4,000 3,000 3,200 6,300 300 16,800 4,200 230 4,430 21,230

net book value

TRIAL BALANCE

cash accrual c/f

VEHICLE EXPENSES $ $ 6,720 230 530 7,020 7,250 7,250 TRADE ACCOUNTS PAYABLES

discounts received1200 cash paid 39400 closing balance c/f7600 48200

4200 44000 48200

TRADE ACCOUNTS RECEIVABLES opening bal. b/f 6300 1620 sales 60000 57980 6700 66300 66300 CASH BOOK opening bal. b/f 4310 39400 trade accounting Receives 57980 7360 agency commision 300 6720 4300 4810 62590 62590

INCOME STATEMENT AS AT 31 MARCH 2009 $ $ SALES 60,000 Opening inventory 3,200 Purchases 44,000 47,200 Damaged inventory -1,000 Stolen inventory -4,000 42,200 Closing inventory 6,200 COST OF GOOD SOLD 36,000 GROSS PROFIT (Sales x 40%) 24,000 Commision on purchases 440 Discounts received 1,200

cost of good sold= opening + purchases -closi 60000x40%=24000

25,640 LESS EXPENES Trade expense Inventory damaged Inventory stolen Vehicle expenses Discounts allowed Depreciation: Buildings Vehicle Total expense NET PROFIT 7,440 1,000 4,000 7,020 1,620 500 1,000 22,580 3,060

t of good sold= opening + purchases -closing

INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER. 2008 $ $ GROSS PROFIT 92,320 Income from investment 1,200 93,520 EXPENSES Wage & salary expenses 27,200 Rates & insurance expenses 4,000 Vehicle running costs 4,150 Postage & telephones 973 General expenses 764 Advertising & promotions 1,833 Damaged stocks written off 867 Accounting & legal expenses 2,210 Director's fees & salaries 8,190 Debenture interest 4,000 Depreciation expenses 8,200 Total expenses 62,387 NET PROFIT 31,133 Dividend & reserse Preferred dividend 3,500 Ordinary share divident. 6,000 Ordinary share recommend 10,000 Transferred reserve 5,000 24,500 Retained earning for the year of 2008 6,633 Retained earning for the year of 2008 b/f 8,090 Unappropriated profit b l f 14,723

Authorized capital Ordinary Preferred

New Shares issued 400000 200000 600000

old pref

100000 50000

BALANCE SHEET AS AT 31 DECEMBER 2008 Fixed assets Premisses Fittings & vehiles Investment: Cost Acc. Depreciation et book value N 122,000 122,000 41,000 24,600 16,400 163,000 24,600 138,400 18,000 156,400

Current assets Inventory Debtors Bank balance Cash in hand prepaid rates Current liabilities Creditors Audit fees owning Debenture interest owning Recommend ordinary div. Recommend preference div. Working capital CAPITAL Authorized share capital 400,000 ordinary shares x $1 200.000 preferences shares x $1 (7%) New issued capital 100,000 Ordinary shares (1$) 50,000 Preferences shares (1$) Reserves General reserve Profit & loss account Shareholders' equity Long-term liabilities Dentures Total capital invested

39,190 31,310 43,812 1,480 260 116,052 24,229 1,000 2,000 10,000 3,500 40,729 75,323 231,723

400,000 200,000 600,000 100,000 50,000 150,000 27,000 14,723 191,723 40,000 231,723