WORKING DOCUMENT
Dr Debtors control account Cr
Balance b/d 120,000 Bad debts 34,000
Cash from debtors 570,000
Credit sales (bal fig) 779,700 Return inwards 5,700
Discount allowed 30,000
Balance c/d 260,000
899,700 899,700
Total sales = cash sales + credit sales
Dr Creditors control account Cr
Discount received 24,000 Balance b/d 160,000
Returns outwards 19,000
Cash 700,000 Credit purchases (bal.) 738,000
Balance c/d 155,000
898,000 898,000
Total purchases = Cash purchases + credit purchases
Mark up = Gross profit/cost of sales
But gross profit = 23,000,000, mark up = 25%
25% = 23,000,000/cost of sales
0.25 = 23,000,000/cost of sales
0.25 cost of sales = 23,000,000
Cost of sales = 23,000,000/0.25
Cost of sales = 92,000,000
From income statement
Sales – cost of sales = gross profit
Sales – 92,000,000 = 23,000,000
Sales = 23,000,000 + 92,000,000
Sales = 115,000,000
But cost of sales = opening stock + purchases – closing stock
92,000,000 = 6,000,000 +purchases – 8,000,000
92,000,000 – 6,000,000 + 8,000,000 = Purchases
94,000,000 = Purchases
Dr Prepaid electricity account Cr
Balance b/d 5,000 Profit or loss** 9,000
Cash 10,000 Balance c/d 6,000
15,000 15,000
Dr Accrued salaries Cr
Cash 10,000 Balance b/d 5,000
Balance c/d 6,000 Profit or loss** 11,000
16,000 16,000
Example Three
H. Semakula keeps his books in single entry basis. The analysis of the cash book for the year
ended on 31st December, 2017 is given below.
Dr. Cr.
Receipts Amounts (Ugx) Payments Amounts (Ugx)
Balance b/d 232,000 Salaries 15,600
Debtors 20,000 Miscellaneous expenses 2,600
Cash sales 122,800 Drawings 5,200
Creditors 85,000
Rent 5,000
Insurance 1,000
Balance c/d 260,400
Total 374,800 Total 374,800
The particulars of other assets and liabilities are as follows.
i). Details 1.01.2017 31.12.2017
Receivables 40,000 62,000
Payables 60,000 64,000
Rent outstanding 2,000 1,000
Motor vehicle 70,000 70,000
Inventory 85,000 50,400
Required: Prepare the statement of comprehensive income and the statement of financial
position for H. Semakula for the year ended 31 st December, 2018. Provide for depreciation on
motor vehicle at a rate of 15% per annum on cost value. (20 marks)
Solution
Steps followed;
Statement of affairs/ opening capital
Cash book
Determining credit sales and credit purchases
Adjusting expenses
Preparing financial statements
H. semakula statement of affairs as at 1.01.2017 Amounts in Ugx
Assets
Receivables (Debtors) 40,000
Motor vehicle 70,000
Inventory 85,000
Cash/bank 232,000
Total assets 427,000
Less: Liabilities
Payables (creditors) 60,000
Rent outstanding 2,000
Opening capital 365,000
Dr Debtors control a/c Cr
Balance b/d 40,000 Cash from debtors 20,000
Credit sales** 42,000 Balance c/d 62,000
82,000 82,000
Note 1: But total sales = cash sales + credit sales
Total sales = 122,800 + 42,000
Total sales = 164,800
Dr creditors control a/c Cr
Cash/bank 85,000 Balance b/d 60,000
Balance c/d 64,000 Credit purchases** 89,000
149,000 149,000
Dr Rent outstanding a/c Cr
Cash 5,000 Balance b/d 2,000
Balance c/d 1,000 Profit or loss a/c** 4,000
6,000 6,000
Depreciation – Motor vehicle = 15% x 70,000 = 10,500
H. semakula statement of comprehensive income for the year ended 31.12.2017 Amounts in
Ugx
Sales (Note 1) 164,800
Less: Cost of sales
Opening inventory 85,000
Add: Purchases 89,000
Less: Closing inventory (50,400) 123,600
Gross profit 41,200
Less: Operating expenses
Salaries 15,600
Misc. expenses 2,600
Rent 4,000
Insurance 1,000
Depn – Motor vehicle 10,500 33,700
Net profit for the year 7,500
H. semakula statement of financial position as at 31.12.2017 Amounts in Ugx
Assets
Non – current assets Cost [Link] NBV
Motor vehicle 70,000 10,500 59,500
Current assets
Inventory 50,400
Receivables (Debtors) 62,000
Cash/bank 260,400 372,800
Total assets 432,300
Owner’s equity & Liabilities
Opening capital 365,000
Net profit 7,500
Drawings (5,200) 367,300
Current Liabilities
Payables (Creditors) 64,000
Rent outstanding 1,000 65,000
Total owner’s equity + Liabilities 432,300
