Answer :
Certainly! Let's start by preparing the financial statements for Kumgi Ltd., step by step.
### Trading and Profit and Loss Account for the Year Ending 31st December 2019
#### Income:
1. Sales: \[tex]$300,000 2. Rent Received: \$[/tex]10,380
3. Commission Received: \[tex]$16,000 4. Return Outwards (deducted from Sales): \$[/tex]2,500
Total Income:
[tex]\[ \text{Sales} + \text{Rent Received} + \text{Commission Received} - \text{Return Outwards} = \$300,000 + \$10,380 + \$16,000 - \$2,500 = \$323,880 \][/tex]
#### Expenses:
1. Wages: \[tex]$1,200 2. Salary: \$[/tex]2,500
3. Carriage Inwards: \[tex]$500 4. Factory Rent: \$[/tex]1,450
5. Office Rent: \[tex]$2,300 6. Insurance: \$[/tex]780
7. Depreciation on Furniture (5% of \[tex]$22,500): \$[/tex]1,125
8. Depreciation on Plant and Machinery (6% of \[tex]$130,000): \$[/tex]7,800
9. Depreciation on Buildings (7% of \[tex]$280,000): \$[/tex]19,600
10. Bad Debts: \[tex]$3,500 11. Additional Bad Debts: \$[/tex]2,000
Total Bad Debts:
[tex]\[ \$3,500 + \$2,000 = \$5,500 \][/tex]
Total Expenses:
[tex]\[ \text{Wages} + \text{Salary} + \text{Carriage Inwards} + \text{Factory Rent} + \text{Office Rent} + \text{Insurance} + \text{Depreciation on Furniture} + \text{Depreciation on Plant and Machinery} + \text{Depreciation on Buildings} + \text{Total Bad Debts} \][/tex]
[tex]\[ = \$1,200 + \$2,500 + \$500 + \$1,450 + \$2,300 + \$780 + \$1,125 + \$7,800 + \$19,600 + \$5,500 = \$42,755 \][/tex]
Net Profit:
[tex]\[ \text{Total Income} - \text{Total Expenses} = \$323,880 - \$42,755 = \$281,125 \][/tex]
### Statement of Changes in Owner's Equity
Change in Equity:
[tex]\[ \text{Net Profit} + \text{Commission} = \$281,125 + \$500 = \$281,625 \][/tex]
### Balance Sheet as at 31st December 2019
#### Assets:
1. Plant and Machinery (less Depreciation):
[tex]\[ \$130,000 - \$7,800 = \$122,200 \][/tex]
2. Debtors (less Bad Debts and Provision for Bad Debts):
[tex]\[ \$50,000 - \$2,000 - \$2,400 = \$45,600 \][/tex]
3. Furniture (less Depreciation):
[tex]\[ \$22,500 - \$1,125 = \$21,375 \][/tex]
4. Buildings (less Depreciation):
[tex]\[ \$280,000 - \$19,600 = \$260,400 \][/tex]
5. Bills Receivable: \[tex]$3,000 6. Cash in Hand: \$[/tex]22,500
7. Cash at Bank: \[tex]$35,000 Total Assets: \[ \text{Plant and Machinery} + \text{Debtors} + \text{Furniture} + \text{Buildings} + \text{Bills Receivable} + \text{Cash in Hand} + \text{Cash at Bank} \] \[ = \$[/tex]122,200 + \[tex]$45,600 + \$[/tex]21,375 + \[tex]$260,400 + \$[/tex]3,000 + \[tex]$22,500 + \$[/tex]35,000 = \[tex]$510,075 \] #### Liabilities: 1. Creditors: \$[/tex]250,000
2. Bills Payable: \[tex]$70,000 3. Provision for Bad Debts: \$[/tex]1,550
4. Rent Received in Advance: \[tex]$6,000 5. Capital: \$[/tex]220,000
Total Liabilities:
[tex]\[ \text{Creditors} + \text{Bills Payable} + \text{Provision for Bad Debts} + \text{Rent Received in Advance} + \text{Capital} = \$250,000 + \$70,000 + \$1,550 + \$6,000 + \$220,000 = \$547,550 \][/tex]
### Summary of Key Results:
1. Total Income: \[tex]$323,880 2. Total Expenses: \$[/tex]42,755
3. Net Profit: \[tex]$281,125 4. Change in Equity: \$[/tex]281,625
5. Total Assets: \[tex]$510,075 6. Total Liabilities: \$[/tex]547,550
This completes the preparation of the Trading and Profit and Loss Account, Statement of Changes in Owner's Equity, and Balance Sheet for Kumgi Ltd.
### Trading and Profit and Loss Account for the Year Ending 31st December 2019
#### Income:
1. Sales: \[tex]$300,000 2. Rent Received: \$[/tex]10,380
3. Commission Received: \[tex]$16,000 4. Return Outwards (deducted from Sales): \$[/tex]2,500
Total Income:
[tex]\[ \text{Sales} + \text{Rent Received} + \text{Commission Received} - \text{Return Outwards} = \$300,000 + \$10,380 + \$16,000 - \$2,500 = \$323,880 \][/tex]
#### Expenses:
1. Wages: \[tex]$1,200 2. Salary: \$[/tex]2,500
3. Carriage Inwards: \[tex]$500 4. Factory Rent: \$[/tex]1,450
5. Office Rent: \[tex]$2,300 6. Insurance: \$[/tex]780
7. Depreciation on Furniture (5% of \[tex]$22,500): \$[/tex]1,125
8. Depreciation on Plant and Machinery (6% of \[tex]$130,000): \$[/tex]7,800
9. Depreciation on Buildings (7% of \[tex]$280,000): \$[/tex]19,600
10. Bad Debts: \[tex]$3,500 11. Additional Bad Debts: \$[/tex]2,000
Total Bad Debts:
[tex]\[ \$3,500 + \$2,000 = \$5,500 \][/tex]
Total Expenses:
[tex]\[ \text{Wages} + \text{Salary} + \text{Carriage Inwards} + \text{Factory Rent} + \text{Office Rent} + \text{Insurance} + \text{Depreciation on Furniture} + \text{Depreciation on Plant and Machinery} + \text{Depreciation on Buildings} + \text{Total Bad Debts} \][/tex]
[tex]\[ = \$1,200 + \$2,500 + \$500 + \$1,450 + \$2,300 + \$780 + \$1,125 + \$7,800 + \$19,600 + \$5,500 = \$42,755 \][/tex]
Net Profit:
[tex]\[ \text{Total Income} - \text{Total Expenses} = \$323,880 - \$42,755 = \$281,125 \][/tex]
### Statement of Changes in Owner's Equity
Change in Equity:
[tex]\[ \text{Net Profit} + \text{Commission} = \$281,125 + \$500 = \$281,625 \][/tex]
### Balance Sheet as at 31st December 2019
#### Assets:
1. Plant and Machinery (less Depreciation):
[tex]\[ \$130,000 - \$7,800 = \$122,200 \][/tex]
2. Debtors (less Bad Debts and Provision for Bad Debts):
[tex]\[ \$50,000 - \$2,000 - \$2,400 = \$45,600 \][/tex]
3. Furniture (less Depreciation):
[tex]\[ \$22,500 - \$1,125 = \$21,375 \][/tex]
4. Buildings (less Depreciation):
[tex]\[ \$280,000 - \$19,600 = \$260,400 \][/tex]
5. Bills Receivable: \[tex]$3,000 6. Cash in Hand: \$[/tex]22,500
7. Cash at Bank: \[tex]$35,000 Total Assets: \[ \text{Plant and Machinery} + \text{Debtors} + \text{Furniture} + \text{Buildings} + \text{Bills Receivable} + \text{Cash in Hand} + \text{Cash at Bank} \] \[ = \$[/tex]122,200 + \[tex]$45,600 + \$[/tex]21,375 + \[tex]$260,400 + \$[/tex]3,000 + \[tex]$22,500 + \$[/tex]35,000 = \[tex]$510,075 \] #### Liabilities: 1. Creditors: \$[/tex]250,000
2. Bills Payable: \[tex]$70,000 3. Provision for Bad Debts: \$[/tex]1,550
4. Rent Received in Advance: \[tex]$6,000 5. Capital: \$[/tex]220,000
Total Liabilities:
[tex]\[ \text{Creditors} + \text{Bills Payable} + \text{Provision for Bad Debts} + \text{Rent Received in Advance} + \text{Capital} = \$250,000 + \$70,000 + \$1,550 + \$6,000 + \$220,000 = \$547,550 \][/tex]
### Summary of Key Results:
1. Total Income: \[tex]$323,880 2. Total Expenses: \$[/tex]42,755
3. Net Profit: \[tex]$281,125 4. Change in Equity: \$[/tex]281,625
5. Total Assets: \[tex]$510,075 6. Total Liabilities: \$[/tex]547,550
This completes the preparation of the Trading and Profit and Loss Account, Statement of Changes in Owner's Equity, and Balance Sheet for Kumgi Ltd.
