KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY

SCHOOL OF BUSINESS
DEPARTMENT OF ACCOUNTING AND FINANCE
ACF 255: FINANCIAL ACCOUNTING I
PRACTICE SET 5: FINANCIAL STATEMENTS OF A SOLE PROPRIETOR

Question 1
Below is the trial balance of Simple Kpanyakpanya Enterprise as at 31 December 2021
DR CR (GH
(GH¢) ¢)
Capital 86,000
Inventory (1/1/21) 60,000
Buildings 120,000
Fixtures & Fittings 10,000
Motor Vehicles 30,000
Trade Receivables & Payables 15,000 40,500
Advertising 1,000
Insurance 1,000
Salaries 45,000
Rates 1,000
Discounts 2,000 1,000
Returns 250 200
Sales & Purchases 80,000 150,050
Electricity 2,000
Bank 8,500
Bank loan (5 years) 90,000
Bank Overdraft 10,000
General expenses 2,000
377,750 377,750

Additional Information:
a) Inventory at 31 December 2021 was valued at GH¢70,000
b) Ignore depreciation and any other accruals and prepayments

You are required to prepare the income statement for the business for the year ended 31
December 2021 and the statement of financial position as at that date.

1
Akua Peprah-Yeboah, Kwame Mireku, Kwadjo Appiagyei, Albert Agyei | KSB
Question 2
Below is the trial balance of Complex Kpanyakpanya Enterprise as at 31 December 2021
DR CR (GH
(GH¢) ¢)
Capital 86,000
Inventory (1/1/21) 60,000
Buildings (Cost) 120,000
Fixtures & Fittings (Cost) 10,000
Motor Vehicles (Cost) 30,000
Trade Receivables & Payables 15,000 40,500
Advertising 1,000
Insurance 1,000
Salaries 45,000
Rates 1,000
Discounts 2,000 1,000
Returns 250 200
Sales & Purchases 80,000 150,050
Electricity 2,000
Bank 8,500
Bank loan (5 years) 90,000
Bank Overdraft 10,000
General expenses 2,000
377,750 377,750

Additional Information:
a) On 30 December 2021, the business decided that GH¢1,000 of the trade receivables
balance should be written off as irrecoverable debts. Provision for doubtful debts is to be
adjusted upwards by GH¢200;
b) Electricity bill outstanding amount to GH¢500 and a quarter of the total electricity
consumed relates to trading;
c) Insurance premium paid in advance was GH¢200 and inventory at 31 December 2021
was valued at GH¢70,000; and
d) Depreciation is charged on cost at the following rates: On fixtures and fittings - 5% and
motor vehicles and buildings – 10%

You are required to prepare the income statement for the business for the year ended 31
December 2021 and the statement of financial position as at that date.

Question 3
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Akua Peprah-Yeboah, Kwame Mireku, Kwadjo Appiagyei, Albert Agyei | KSB
The following balances were extracted from the books of Tina Enterprise
TINA ENTERPRISE
Trial Balance as at December 31, 2021
DR (GH¢) CR (GH¢)
Purchases 95,850
Carriage inwards 1,400
Carriage outwards 500
Capital (1 January, 2021) 63,400
Cash discounts 1,250 700
Rent 8,000
Returns outwards 2,800
Returns inwards 2,090
Sales 152,000
Inventory (1 January, 2021) 12,100
Wages and salaries 15,000
Trade receivables 15,300
Allowance for irrecoverable debts 180
Trade payables 4,860
Bank loan 21,000
Interest on loan 3,000
Utilities 12,500
Shop fittings (cost) 4,500
Accumulated depreciation (1 January, 2021) 1,800
Delivery Van (cost) 68,000
Accumulated depreciation (1 January, 2021) 24,480
Drawings 9,700
Cash and bank balances 22,030
271,220 271,220
Additional information:
a) Value of inventory at the end of the year is GH¢13,500.
b) Rent prepaid is GH¢2,500 and utility bills outstanding amount to GH¢2,000.
c) Tina took inventory costing GH¢1,000 for personal use.
d) Interest rate on the bank loan is 20% per annum.
e) Plant and equipment are depreciated as follows:
Shop Fittings – 15% using the straight-line method
Delivery Van – 20% using the reducing balance method
f) Trade receivables amounting to GH¢300 have been declared uncollectible. The
allowance for irrecoverable debts is to be maintained at 2% of the net trade receivables
balance.
Required: Prepare an income statement for the year ended 31 December 2021 and the statement of
financial position as at that date for Tina Enterprise.

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Akua Peprah-Yeboah, Kwame Mireku, Kwadjo Appiagyei, Albert Agyei | KSB