Question 9 The following ledger balances are extracted from the books of White Trading Com

Question 9

The following ledger balances are extracted from the books of White Trading Company as at 31 December 2003:

＄

Bad debts 750

Bank overdraft 1,650

Capital 100,000

Carriage inwards 3,500

Carriage outwards 1,400

Creditors 18,500

Debenture interest 900

Debtors 12,500

Discounts allowed 1,300

Discounts received 1,500

Drawings 24,900

Equipment (at cost) 150,000

Insurance 1,000

Lighting 5,000

Motor Van 40,000

Provision for bad debts 1,100

Provision for depreciation

—Equipment 90,000

—Motor Van 18,000

Purchases 1,000,000

Rent & rates 110,000

Salaries and wages 210,000

Sales 1,400,000

Stock 1 January 2003 90,000

Returns inwards 13,000

Returns outwards 13,500

9% 1998-2008 10-year Debenture 20,000

Additional information relevant to the year ended 31 December 2003 is as follows:

1. Closing stock at 31 December 2003 ＄115,000

2. Accrued wages ＄20,000

3. Prepaid insurance ＄200

4. Outstanding telephone bill ＄200

5. Outstanding rent ＄10,000

6. Removal expenses of ＄950 are still outstanding because of dispute and they have not yet been entered into the accounting records.

7. The depreciation policy is:

(a)Equipment reducing balance method at 5% p.a

(b)Motor Van: 25% p.a on cost

8. It is a policy to make a provision for bad debts at 4% of outstanding debtors on the balance sheet date.

Required:

Prepare the Trading and Profit and Loss Account for the year ended 31 December 2003.