High School

**Trial Balance as at 30 June 2023 for ExpressUs**

| Account | € | € |
|-----------------------------------|----------|-----------|
| Accountancy Fees | 8,520 | |
| Advertising | 2,640 | |
| Bank | 10,950 | |
| Capital | | 156,280 |
| Cash in hand | 700 | |
| Accounts Payable | | 19,850 |
| Accounts Receivable | 19,400 | |
| Rent Received | | 4,500 |
| Drawings | 14,500 | |
| General Repairs | 5,360 | |
| Heat & Light | 14,560 | |
| Insurance | 6,520 | |
| Loan - Total Repayable in 5 years | | 50,000 |
| Motor expenses | 18,690 | |
| Motor vehicles | 111,000 | |
| Motor vehicles - acc depr at 30 June 2022 | | 27,000 |
| Office Equipment | 76,000 | |
| Office Equip - acc depr at 30 June 2022 | | 28,000 |
| Postage and Stationery | 1,740 | |
| Premises | 160,000 | |
| Premises acc depr at 30 June 2022 | | 32,500 |
| Purchases | 192,300 | |
| Revenue | | 374,590 |
| Stock at 30 June 2022 | 17,020 | |
| VAT | | 2,580 |
| Salaries | 31,400 | |
| Bad Debts | 4,000 | |
| **Totals** | **695,300** | **695,300**|

**Adjustments:**

1. Depreciation is not yet provided for y/e 30 June 2023. Depreciation is to be charged on the following basis:
- Motor vehicles: 25% p.a. reducing balance
- Office equipment: 50% p.a. reducing balance
- Premises: 2% p.a. straight line
- A full year's depreciation is charged in the year of acquisition and none in the year of disposal.

2. Closing stock is valued at €12,220.

3. There are outstanding bills at 30 June 2023 for electricity of €340.

4. A debtor has refused to pay €1,500. This must be written off.

5. Create a Provision for Doubtful Debts at 1.5% of Debtors.

**Requirements:**

a. Prepare the Income Statement and Statement of Financial Position as at 30th June 2023.

Answer :

The Income Statement for ExpressUs as at 30 June 2023 shows a net profit of €35,110. The Statement of Financial Position reflects total assets of €398,620 and total equity and liabilities of €249,689.

Income Statement for ExpressUs as at 30th June 2023: Revenue: €374,590

Less Expenses:

  • Accountancy Fees: €8,520
  • Advertising: €2,640
  • General Repairs: €5,360
  • Heat & Light: €14,560
  • Insurance: €6,520
  • Motor Expenses: €18,690
  • Postage and Stationery: €1,740
  • Salaries: €31,400
  • Bad Debts (4,000+1,500): €5,500
  • Depreciation - Motor Vehicles: €20,250
  • Depreciation - Office Equipment: €24,000
  • Depreciation - Premises: €3,200
  • Cost of Goods Sold (Opening Stock + Purchases - Closing Stock): €197,100 (17,020 + 192,300 - 12,220)

Total Expenses: €339,480

Net Profit: €35,110 (Revenue - Total Expenses)

Statement of Financial Position for ExpressUs as at 30th June 2023:

  • Non-Current Assets: €355,050 (Motor Vehicles: 111,000 - 47,250 + Office Equipment: 76,000 - 52,000 + Premises: 160,000 - 35,700)
  • Current Assets: €43,570 (Bank: 10,950 + Cash in Hand: 700 + Accounts Receivable: 17,900 [19,400 - 1,500 - 29] + Closing Stock: €12,220 + Prepaid Expenses [Insurance Adjustment]: 1,800)
  • Total Assets: €398,620
  • Capital and Liabilities:
  • Capital: €156,280
  • Drawings: (€14,500)
  • Add Net Profit: €35,110
  • Total Equity: 176,890
  • Accounts Payable: €19,850
  • VAT: €2,580
  • Oustanding Bills (Electricity): €340
  • Provision for Doubtful Accounts: €29
  • Loan - Long Term: €50,000
  • Total Liabilities: €72,799
  • Total Equity and Liabilities: €249,689

The net profit calculated is €46,279 while total assets and liabilities equal €254,909.

To prepare the Income Statement and Statement of Financial Position for ExpressUs as at 30th June 2023, follow these steps:

Step 1: Income Statement for the Year Ended 30 June 2023

Revenue: €379,090 (374,590 + 4,500 rent received)

Less: Expenses:

  • Accountancy Fees: €8,520
  • Advertising: €2,640
  • General Repairs: €5,360
  • Heat & Light: €14,900 (14,560 + 340 outstanding)
  • Insurance: €6,520
  • Motor Expenses: €18,690
  • Postage and Stationery: €1,740
  • Purchases: €192,300
  • Salaries: €31,400
  • Bad Debts Written Off: €1,500
  • Depreciation on Motor Vehicles: €21,750 (111,000 - 27,000) x 25%
  • Depreciation on Office Equipment: €24,000 (76,000 - 28,000) x 50%
  • Depreciation on Premises: €3,200 (160,000 x 2%)
  • Provision for Doubtful Debts: €291 (19,400 - 1,500) x 1.5%
  • Total Expenses: €332,811

Net Profit= €46,279 (379,090 - 332,811)

Step 2: Statement of Financial Position as at 30 June 2023

Assets:

  • Non-Current Assets:
  • Premises: €160,000
  • Less Accumulated Depreciation: €35,700
  • Net Premises: €124,300
  • Motor Vehicles: €111,000
  • Less Accumulated Depreciation: €48,750
  • Net Motor Vehicles: €62,250
  • Office Equipment: €76,000
  • Less Accumulated Depreciation: €52,000
  • Net Office Equipment: €24,000
  • Total Non-Current Assets: €210,550
  • Current Assets:
  • Stock: €12,220
  • Accounts Receivable: €17,909 (19,400 - 1,500 - 291 provision)
  • VAT: €2,580
  • Bank: €10,950
  • Cash in Hand: €700
  • Total Current Assets: €44,359
  • Total Assets: €254,909

Step 3: Equity and Liabilities:

  • Capital: €156,280
  • Add Net Profit: €46,279
  • Less Drawings: €14,500
  • Total Equity: €188,059
  • Non-Current Liabilities:
  • Loan: €50,000
  • Current Liabilities:
  • Accounts Payable: €19,850
  • Outstanding Electricity Bills: €340
  • Total Current Liabilities: €20,190
  • Total Liabilities: €70,190
  • Total Equity and Liabilities: €254,909.

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