Question 2 ICLO 2 The following is the Trial Balance of LOP Company as of 31 Dec
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Question 2 ICLO 2 The following is the Trial Balance of LOP Company as of 31 December 2017: Particulars Dr Amount Cr Amount Capital Opening stock Direct expenses Salaries Purchases Rent and rates Sales Interest received Discount received Drawings Advertisement Cash in hand Cash at bank Sundry debtors Buildings Sundry creditors Furniture Vehicles $600,000 $114,000 $58,000 $72,000 $98,000 $10,000 $184,000 $12,400 $6,000 $54,400 $22,000 $52,000 $70,000 $80,000 $112,000 $36,000 16,000 50,000 20,000 10,000 $838,400 Prepaid Insurance Prepaid salaries $838,400 The stock on 31 December 2017 is $501,600. You are required to prepare the Trading and Profit and Loss Account for the year ended 31 December 2017 and the Balance Sheet as on that date for LOP CompanyExplanation / Answer
LOP Company
Trading and Profit and Loss Account
For the Year ended December 2017
Sales
$ 184,000.00
Cost of Goods Sold
Opening Stock
$ 114,000.00
Purchases
$ 98,000.00
Less: Closing Stock
$ 501,600.00
$ (289,600.00)
Less: Direct Expenses
$ 58,000.00
Gross profit
$ 415,600.00
Operating Expenses:
Salaries
$ 72,000.00
Rent and Rates
$ 10,000.00
Advertisement
$ 22,000.00
Operating Income
$ 311,600.00
Add: Other Incomes
Interest received
$ 12,400.00
Discount Received
$ 6,000.00
Net Profit
$ 330,000.00
LOP Company
Balance Sheet
For the Year ended December 2017
Current Assets:
Cash in Hand
$ 52,000.00
Cash at Bank
$ 70,000.00
Sundry Debtors
$ 80,000.00
Prepaid Insurance
$ 20,000.00
Prepaid Salaries
$ 10,000.00
Inventory
$ 501,600.00
Total current assets
$ 733,600.00
Property,Plant and Equipment:
Building, net
$ 112,000.00
Furniture, Net
$ 16,000.00
Vehicles
$ 50,000.00
Total Property, Pant & Equipment
$ 178,000.00
TOTAL ASSETS
$ 911,600.00
Current Liabilities:
Sundry Creditors
$ 36,000.00
Total Current Liabilities
$ 36,000.00
Total Liabilities
$ 36,000.00
Owners' Equity:
Owner, Capital Account
$ 875,600.00
Total Liabilities and Owners Equity
$ 911,600.00
Working note 1)
Capital Account
Opening
$ 600,000.00
Add: Profit During Year
$ 330,000.00
Less: Drawings
$ 54,400.00
Closing Balance
$ 875,600.00
Working Note 2)
Closing Stock is shown at two places . First in Trading Account and second in balance sheet as asset.
LOP Company
Trading and Profit and Loss Account
For the Year ended December 2017
Sales
$ 184,000.00
Cost of Goods Sold
Opening Stock
$ 114,000.00
Purchases
$ 98,000.00
Less: Closing Stock
$ 501,600.00
$ (289,600.00)
Less: Direct Expenses
$ 58,000.00
Gross profit
$ 415,600.00
Operating Expenses:
Salaries
$ 72,000.00
Rent and Rates
$ 10,000.00
Advertisement
$ 22,000.00
Operating Income
$ 311,600.00
Add: Other Incomes
Interest received
$ 12,400.00
Discount Received
$ 6,000.00
Net Profit
$ 330,000.00
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